FE Report
The government's revenue earnings from the prime bourse fell sharply by 26 per cent in the first-quarter (Q1) of the current fiscal year (FY) 2015-16 against the corresponding period of the last fiscal year as trading volume was on the decline.
The government bagged tax worth Tk 379.15 million in the first three months (July-September) of the FY 2015-2016, which was Tk 516.04 million in the corresponding period of the previous fiscal, according to statistics from the Dhaka Stock Exchange (DSE).
The government earned the amount on TREC (trading right entitlement certificate) holders' commission and share sales by sponsor-directors and placement holders.
Of the total revenue earnings of Tk 379.15 million in the first three months of the current fiscal year, Tk 311.33 million came from the TREC holders' commission and Tk 67.83 million came from the share sales by sponsor-directors and placement holders, the DSE data showed.
The DSE, on behalf of the government, collects the tax as TREC holders' commission and share sales by sponsor-directors and placement holders at the rate of 0.05 per cent and 5.0 per cent respectively and deposits the amount to the government exchequer.
On the other hand, the government earned Tk 513.04 million in the first three months of the fiscal year 2014-15. Of them, Tk 343.55 million came from TREC holders' commission and Tk 172.49 million came from share sales by sponsor-directors and placement holders, the DSE data showed.
The month-on-month government's earnings from DSE also dropped 12.20 per cent in September compared to the month of August. In September, the government earned tax worth Tk 129.90 million which was Tk 147.95 million in August, 2015.
The daily average turnover on the DSE came down to Tk 4.40 billion in September which was Tk 6.08 billion in the month of August, 2015, the DSE data showed.
However, the benchmark index of the DSE rose around 83.42 points or 1.75 per cent to settle at 4,852.08 in September compared to the month of August.
DSE officials said the tax collection declined in first quarter (Q1) in current fiscal year due to lower transactions following the sluggish trend in stock prices.
"A bearish trend in the capital market has pulled down the government's earnings from stocks, as the trading volume was on the decline," a DSE source said.
DSE also witnessed less trading sessions (19 sessions) in September as the market was closed for five days on the occasion of Eid-ul-Azha while August month saw 22 trading sessions.
"The earnings are related to turnover. It's usual that tax will fall if turnover declines," said Akter H Sannamat, a stock market analyst.
"The turnover marked a decline in the first three months of the FY 2015-16, compared to same period last fiscal, so did tax," said Mr Sannamat. "The tax flow will rise when the market will be back on track," he added.
DSE data showed that in the last three fiscal years, the revenue earnings of the government from the stock market declined due to lower turnover value following slide in shares prices.
DSE paid tax worth Tk 2.72 billion in the fiscal year 2011-12, Tk 1.27 billion in the fiscal year 2012-13, Tk 1.54 billion in the fiscal year 2013-14 and Tk 1.74 billion in the fiscal year 2014-15 on TREC holders' commission and share sales by sponsor-directors and placement holders.
However, DSE paid tax worth Tk 4.47 billion in the fiscal year 2010-11, highest in its history, when the market saw a bullish trend.
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