May reinstate scope for dividend-based tax rebate
Tax on realised gains from stock investment is likely to remain unchanged in the next budget as the government decided not to change the provision in the proposed Finance Bill-2014, officials of the finance ministry said. On the other hand, the government may increase the tax exemption on dividend income up to Tk 20,000 that the investors get from the listed companies from the proposed Tk 15,000, they said.
The government may also offer tax rebate for the companies listed in the share market.
The companies which will pay dividend more than 40 per cent will get 10 per cent tax rebate on their income tax, according to the proposed amendment.
Earlier, companies would get 10 per cent rebate if they gave 20 per cent dividend but the provision was scraped in the proposed finance bill.
The government may also exclude from the finance bill a provision that proposed to allow cost and management accountants to conduct audit and certify financial reports under the tremendous pressure from the Institute of Chartered Accountants of Bangladesh.
It may also scrap a provision making mandatory for partnership, enterprises and professionals with income exceeding Tk 5 crore a year to submit audited account statements to the NBR.
Finance minister AMA Muhith on June 5 placed the finance bill in parliament proposing 3 per cent tax on individual investors with more than Tk 10 lakh but less than Tk 20 lakh capital gain in a year from the stock market and 5 per cent tax on capital gain above Tk 20 lakh.
Investors protested against the decision and demanded withdrawal of imposition of gain tax. The country’s two bourses also reacted sharply with ups and downs in the 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.
The National Board of Revenue officials said that the finance minister on Sunday instructed them to keep the provision unchanged in a bid to bring people with more income under tax net and collect revenue from the sector.
The government thinks that those who earn above Tk 10 lakh a year from share market should pay tax, they said.
Small and medium investors will not be affected due to the imposition of gain tax, they said.
Earlier, capital gain from the stock market was tax-free.
Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange were demanding to scrape the new provision saying that the imposition of gain tax would create significant effect on the market.
On the other hand, investors get tax exemption on dividend up to Tk 10,000 and they have to pay tax at the rate of 10 per cent on the amount above Tk 10,000.
In the proposed finance bill, the government proposes to increase the tax-free dividend to Tk 15,000 which now will be Tk 20,000.
Demutualised DSE and CSE will enjoy tax holiday for the next five years until in a way the finance minister proposed in the finance bill.
Finance minister proposed tax holiday in a graduated rate for the exchanges but they demanded for absolute tax holiday for next 5 years.
-With New Age input
