Doulot Akter Mala

The government has hiked tax rates on share transactions by 67 per cent, raising it to 0.025 per cent from 0.015 per cent, with the objective of collecting substantial amount of revenue from the booming share business.

Stock exchange members will have to collect the increased tax at source from the current fiscal.

The government had introduced 0.015 per cent tax on transaction of shares in 2005. The tax rate remained same in the last three years despite a substantial growth in the share transactions, said a senior tax official.

The stock brokers deduct the taxes at source from transaction of shares, debentures, mutual funds, bonds or values of securities and pay the same to the government.

In the last fiscal, the revenue board has earned Tk 270 million from transactions of shares by stock exchange members. The earnings totaled Tk 190 million in fiscal 2007-08.

The NBR eyes substantial increase in income tax collection from this source following bullish trend in the share market.

Saiful Islam, senior vice president of Dhaka Stock Exchange (DSE), said: "We are willing to pay tax. But the increase should be more rational. The government has raised tax rates by nearly 70 per cent at a time."

The tax rates could have been raised gradually to ease burden on stock exchange members, he said.

"We have accepted the tax rates for the greater interest of the people although it would be a burden for our members," he said.

"We have to face tough competition in the share market. So profit margin declined significantly although share trading increased manifold," he said.

Broker houses have to fix competitive commission rates to attract more clients, he added.

Nasir Uddin Chowdhury, chief executive officer of the leading multi-product financial institution LankaBangla Finance Limited also echoed the same views.

"It is a big jump from the previous tax rates. It would be create pressure on us as direct expenses of DSE members surged significantly with the impressive growth in share market," he said.

The government could have raised the rate in phases to ease tax burden on stock dealers, he added.

There are 230 members in the DSE, who are also shareholders of the exchange.

The members are licensed by the Securities and Exchange Commission (SEC) for conducting trading as Stock Dealer or Broker.