KARACHI: Finance Minister Dr Abdul Hafeez Shaikh on Saturday agreed to the proposals of Securities Exchange Commission of Pakistan (SECP) for increasing trade volumes at the Karachi Stock Exchange (KSE), by removing withholding tax (WHT) on brokers’ commission and freezing current rate of Capital Gain Tax (CGT) till June 2014.

Addressing KSE members, he said that CGT was an important tax which was imposed on short term gains despite its opposition from KSE members.

“I accept these proposals from the SECP,” he said amid applause from KSE members. He also ordered that the proposals be operationalised by April 1.

Earlier, Chairman SECP Muhammad Ali in his speech said that the burden of CGT had pulled down the market capitalization of KSE from $75 billion to $33 billion, thus wiping out $42 billion from the market.

Imposing of CGT had affected investors’ confidence and brokers’ capacity to do business and created a liquidity crunch in the market, he added.

Brokers welcome removal of WHT, freezing of CGT rates

Leading market players welcomed the decision to remove WHT on broker’s commission and freezing of current CGT rates on securities trading till June 2014.

Responding to the finance minister’s decision of accepting proposals of SECP to enhance trade volumes in the stock market, a leading broker Aqeel Karim Dedhi said that it will increase the volume ten times.

This is a good move which will enhance the confidence of the investors in the market and bring in more investment into market, he added.

He said the impact of this decision will be witnessed in the market from next Monday.

AKD said that volumes had dropped to lowest levels due to levy of CGT and double taxation in the form of withholding tax.

Another leading broker Arif Habib said WHT was a double taxation and it was the public demand to remove it.

“We are now at par with other commodity markets in the country,” he said.

Habib added that trade volumes would surge to 200 million from next week and would gradually go up. He hoped that new investment would come to the market after the freezing of CGT.