Business Report :
The government plans to impose capital gains tax on the stock market investors from the next fiscal year that is another blow on them.
General investors will be charged 15 percent capital gains tax if their income crosses Tk 50 lakh.
While tabling the national budget for the fiscal year 2024-25, Finance Minister Abul Hassan Mahmood Ali proposed “to tax any capital gain exceeding Tk 50 lakh received by a natural individual taxpayer from the transfer of shares or units of a listed company or fund.”
This move reverses a 2015 policy that exempted individual investors from capital gains taxes.
The minister made the proposal to rationalise tax expenditure in FY25.
He noted that general investors will be charged a 15 per cent capital gains tax if their income exceeds the Tk 50 lakh threshold.
“We have been providing tax exemption facilities for a long time with the aim of promoting investment and trade in the country, increasing employment and exports. “A number of important sectors currently enjoy full tax exemption, and many sectors pay income tax at a reduced rate. Although tax exemptions have increased investment and employment, the tax base is shrinking to a large extent,” Mahmood Ali added.
However, following a rule implemented earlier in 2015, individual investors were exempt from paying tax on capital gains from stocks, mutual funds, bonds, and debentures.
The proposed budget raises the capital gains tax for sponsors and directors of listed companies from 5 per cent to 10 per cent. However, gifts of shares between parents, children, and spouses remain tax-free. In the bill placed before parliament, the minister also proposed allowing the investment of undisclosed income in the stock market without penalty.
In 2015, individual investors were exempted from paying tax on capital gains from stocks, mutual funds, bonds and debentures.
Sponsors and directors of listed companies currently face a 5 percent tax deduction at source on capital gains from share transfers. The government has increased this rate to 10 percent in the proposed budget.
However, the tax will not be applicable in case of share transfer if it is considered as gift between parents and children, and between spouses.
In the finance bill, the government has allowed the investment of black money in the stock market and investors will not face any questions in this regard.