Dhaka, June 27 (New Age): The government is likely to
increase the limit of tax-free capital gains from stock investment for individual
investors to Tk 20 lakh from the proposed Tk 10 lakh amid protest from the
investors, officials of the National Board of Revenue said.
The government may also reduce the proposed tax on
realised capital gains and increase the slabs of gains bowing down the
tremendous pressure from the stock market players, they said.
In the last moment, the revenue officials on Thursday
prepared an amendment proposal of the Finance Bill-2014 following the
instruction from the finance minister Abul Maal Abdul Muhith.
According to the proposal, individual investors will have
to pay tax at the rate of 2 per cent on capital gains from Tk 20 lakh to Tk 50
lakh in the coming fiscal year of 2014-15.
Tax will be imposed at the rate of 3 per cent on capital
gains above Tk 50 lakh, officials said.
Earlier on June 5, Muhith proposed in the finance bill to
impose tax on capital gains for the first time in the country.
The proposed tax rate was 3 per cent on capital gains
above Tk 10 lakh but less than 20 lakh, 5 per cent for above Tk 20 lakh.
Tax-free limit of capital gains was proposed at Tk 10
lakh.
Earlier this week, finance minister in a meeting with the
NBR officials organised for finanlising amendment of the finance bill
categorically instructed for not to change the proposed tax rate and tax-free
limit.
By this time, Bangladesh Securities and Exchange
Commission, Dhaka Stock Exchange and Chittagong Stock Exchange mounted pressure
on the NBR and lobbied with the government high-ups to withdraw the proposed
tax.
The country’s two bourses also reacted sharply to the ups
and downs in the capital market.
Experts also criticised the decision saying that though
the imposition of tax on higher capital gain was right but it was not the right
time to do so and the decision would put a negative impact on the already
volatile market.
Muhith, returning from Jeddah on Thursday morning, asked
the revenue officials for changing the tax rate and tax-free threshold,
officials said.
By the evening, the amendment was sent to the law
ministry for vetting, they said.
The proposed amendment is final and it will not be
changed unless the prime minister instructs otherwise, officials said.
The NBR also finalised an upward revision of the proposed
tax exemption limit on dividend income increasing the amount to Tk 20,000 from
the proposed Tk 15,000.
Currently, stock investors enjoy tax exemption on
dividend up to Tk 10,000.
NBR officials said that the government imposed tax on
realised gains to boost revenue collection from the sector.
The initiative was just and fair taking the amount of
realised gains into consideration.
‘An investor who has high capital gains from the capital
market should pay tax and the proposed slab at Tk 10 lakh capital gains in a
year for imposing tax was reasonable,’ an official said.
Small investors who are dominating in the market would
not be affected by the decision, he said.
Finance minister was also convinced and decided to not to
change the proposal till Sunday, but he has to bow down to the pressure from
beneficiaries to review the proposal, he said.
There are approximately 29.79 lakh beneficiary owner’s
accounts in the country.
The revenue board expected to collect nearly Tk 200 crore
from tax on capital gains. Now the amount will be significantly low.