By Ali Imran
ISLAMABAD: Shares at the Pakistan Stock Exchange (PSX) remained subdued, declining by more than 300 points on Thursday.
The benchmark KSE-100 index lost 356.50 points, or 0.48 per cent, to stand at 73,862.93 points from the previous close of 74,219.43.
Mohammed Sohail, chief executive of Topline Securities, attributed the bearish momentum to “fear of increase or change in treatment of dividend and gain tax affecting market sentiments”.
Muhammad Awais Ashraf, director research at AKD Securities, said, “Investors are anxious about the impending budget’s potential hike in the Capital Gains Tax rate, increased taxes on dividend income, and the elimination of exemptions for investments in mutual funds and insurance.”
Shahab Farooq, director of research at Next Capital Limited, observed, “Investors remained jittery today as well on uncertainties and concerns surrounding budgetary measures, and politics with reduced turnover.”
A Topline report suggested in its pre-budget report on June 1, “To meet high tax target, government may increase tax on dividend, capital gain and interest income.
This, along with any change in the status of these taxes from full and final to normal tax will affect net returns of the stock market investors”.
In another note, the brokerage highlighted, “Post this amendment (if happens), the capital gain and dividend income both will be added to the whole normal income of the individuals (for example, salary, income from business etc.) and tax rate will be applied based on the applicable tax rate according to income slab.”
“However, in case of individuals, if this happens, will create a disparity and put extra burden on individuals since expenses are not deducted from income of individuals,” it added.
