ISLAMABAD: In a bid to revive investor confidence in the bourse, the government has decided to reduce the advance income tax and capital gains tax on the sale and purchase of shares. The Pakistan Stock Exchange benchmark index has fallen to its two-year lows losing 4,200 points, or 10 per cent, during first two weeks of this month.

The government accepted stockbrokers’ demands after a delegation of PSX Stockbrokers Association on Monday held meetings with Finance Minister Asad Umar, Minister for State on Finance Hammad Azhar and the Securities and Exchange Pakistan (SECP) Chairman Shaukat Hussain.

The delegation is scheduled to hold another meeting with the SECP chairman and representatives of the Federal Board of Revenue (FBR) on Tuesday. It will discuss their long-standing demand to reduce tax rate under section 233A of Income Tax Ordinance 2001 and rationalisation of Capital Gains Tax (CGT).

The delegation was led by the association’s president Hammad Kehar who shared their concern on stock market’s continuous slide with the SECP chairman and presented a list of “33-demands and suggestions” to the finance minister.

The brokers urged the government to intervene and stop the spread of rumours and misinformation which is taking its toll on the stock market.

The delegation included vice-president Munir Khanani, general-secretary Adil Ghaffar and members Ghulam Mujtaba, Bilal Farooq and Farrukh Khan.

It also met Minister for State on Finance Hammad Azhar and raised their demands related to the taxation issues.

The minister called in Amjad Tiwana, Special Assistant to the FBR chairman, to discuss income tax matters following which it was decided to reduce the advance tax under Section 233A of the Income Tax Ordinance 2001 from 0.02pc to 0.01pc.

The brokers also asked the government to amend section 58 and 59 so that the loss can be carried forward by the brokers.

The state minister also accepted brokers’ demand to rationalise CGT by making it equal to that of property rate.

“Currently, the CGT on trade of shares is at 15pc, on property it is 15pc if it was sold within one year of purchase, 10pc if sold within two years and 5pc if sold within three years,” said a members from delegation.

He added that brokers presented these demands to the previous government but they were turned down by former finance minister Ishaq Dar.

The delegation is scheduled to discuss these matters with the senior management of FBR and also discuss cost of doing business with SECP representatives on Tuesday.

An SECP official said the brokers’ concerns include reducing the number of audits for the brokers and relaxations in some of stringent measures regarding know your customer and anti-money laundering regulations.

Published in Dawn, October 16th, 2018