Reduction in capital gains tax improving the investor sentiment
The Pakistan Stock Exchange’s benchmark KSE-100 index was trading at 48,931 points early Monday, which is the highest level in the last four years. Concession in the capital gains and other taxes were the main reason for the positive outlook.
In his budget speech last week, Finance Minister Shaukat Tarin announced a reduction in the capital gains tax (tax paid on profits earned on the sale of shares).
Capital gain tax rate on the sale of shares has been reduced from 15% to 12.5% for filers, he said. After the reduction in the tax rate next month, stock sellers will have to pay less capital gains tax for booking profits.
Apart from the reduction in capital gains tax rate in the budget, incentives have also been given to different industries including pharmaceutical, steel and car industry, senior research analyst Raza Jafri told SAMAA Digital.
Sales tax has been reduced from 17% to 12.5% on cars with engine size below 850cc, while the 2.5% Federal Excise Duty has been removed.
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Jafri, however, said the stock market’s condition depends on the approval of the budget by the National Assembly.
“If the budget is approved, I expect the stock market to trade at 55,000 points in the next six months,” he said.