ISLAMABAD ( JAVID CHOUDHRY )
In the new budget for the fiscal year 2022-23 the government has announced the imposition of super-tax on banks operating in Pakistan. From July 1, 2022, the banks will pay 45 percent of their profit as corporate/income tax to the Federal Board of Revenue. At present, the banks are paying 39 percent tax on their profits.
It’s a pro-IMF budget where the only target is to get loans and focus on their repayments. Only relaxation is given to the salary class as the inflation is sky rocketing.
Below is detail of some of the new tax measures:
Capital gain tax on stock market shares has been raised to 15% from 12.5% which will have negative impact on stock market.
Tax rebates on investments in mutual funds withdrawn which is another negative development for capital market.
Overall majority sectors will be hit by tax, thus resulting in market crash or south driven.
Construction material Cements and steel.
Only positive thing is 100% depreciation allowed in first year for the real estate sector. Taxes on real estate _ @ 15% advance _ tax 2% for filers and 5% for non-filers. This tax for non-filers was 1% which will go up to 5% from July 2022, which will have negative impact on property.
Another Pandora’s Box opened for FBR is the assessment of market value, grey area and it will increase chances of corruption. Hit will be on real estate and ultimately affect on construction material sector.
OMC /REFINERIES: This sector will experience negative impact due to levy of petroleum development levy (PDL) _ 30 rupees per liter as per PTI government’s commitment with the IMF.
AUTO ASSEMBLER: Advance tax increased on 1600cc cars, cut imposed on above 5 million value @ 2% additional tax on companies.
TELECOM: In the new budget the government has increased the rate of federal excise duty to 19.5% from 16% on telecom sector. It will cause more financial burden on the telecom users.
IT sector will see positive impact as tax on exports is being reduced to 0.25% from 1% from July this year.
Overall 2% additional tax on companies having annual profit above 300 million will result in negative impact.
Nabil Ahmed, CEO Spectrum Securities, a corporate brokerage, said, “I don’t think PSX will flourish, volumes may further fall. Real estate money will not divert to capital market in near terms.”
He said that inflation will increase further in coming days.
However, upcoming meeting with IMF on 20th June should be conclusive and positive, otherwise in case of further delay in resumption of IMF loan, stock market may fall drastically. Secondly FATF should decide in Pakistan’s favour and put country back into white list because this will give breather to stock market.