The proposed budget for the 2013-14 fiscal year contained a scheme for an incentive package for the investors in the stock market.
The budget that Finance Minister AMA Muhith placed at the parliament Thursday included proposals for continuing certain existing tax exemptions, repealing of a number of taxes and continuing the provision for allowing conditional investment of undisclosed money.
The budget proposed to continue the existing provision for exempting taxes on gains from transactions of shares by individual taxpayers.
It also proposed to annul the existing provision for charging 3% tax on the premium over the face value of shares of a company.
Moreover, provisions for charging 0.05% tax at source on the total income from bond sale proceeds and the 15% tax rebate on investment in private and public mutual funds have been repealed in the proposed budget.
There were also proposals for extending the limit of tax-exempted income from dividends from Tk5,000 to Tk10,000.
Muhith in his budget speech also said the government had plans for awarding special tax exemption facilities to the stock market after the demutualisation process of the stock market was finished.
Stock market leaders had earlier in pre-budget proposals set out a demand for a 5-year tax exemption facility following the completion of the demutualisation process.
The budget for the 2013-14 fiscal year also proposed to continue to allow the investment of undisclosed money in the stock market. As per current arrangements, undisclosed income can be invested in the stock market by paying a 10% penalty besides applicable rates.
In his budget speech, the finance minister said: “Our government wants to build the capital market as a dynamic source of capital. This prompted us to pay due attention to the development of the capital market from the very beginning. The Demutualization Act has been passed by the parliament. As a result the market is now a bit stable.”
Muhith said a total of Tk42.8bn has been raised from the capital market through Initial Public Offerings since the current government came to power in 2009.
This amount was only Tk4.3bn during the period from 2001 to 2006, he said.
Likewise, investment through the issuance of rights share has been raised from Tk3.02bn to Tk58bn, the finance minister said.
He attributed the achievements in the textile sector, particularly in readymade garments, to the raising of capital from the stock market.
President of Dhaka Stock Exchange Rakibur Rahman lauded the incentive package in his immediate reaction to the budget.
He said the budget reflected the expectations of the investors and the proposals would help stabilise the market.
