Chairman of the National Board of Revenue (NBR). A delegation led by Dhaka Stock Exchange (DSE) Chairman Mominul Islam met Abdur Rahman Khan. At this time, DSE requested the policy support of the National Board of Revenue to bring back the positive trend in the capital market. In view of this request, NBR has assured to provide policy support in the interest of capital market and investors.
The meeting was held on Sunday (October 27) at the NBR office on both sides. Deputy General Manager (Publication and Public Relations Department) Md. This information has been informed in a press release signed by Shafiqur Rahman.
It is mentioned in the notification, Chairman of NBR. During the meeting with Abdur Rahman Khan, besides DSE Chairman Mominul Islam, Director Prof. Major General (Retd.) Mohammad Kamruzzaman, Md. Shakeel Rizvi, Richard De Rosario, Acting Managing Director Satvik Ahmed Shah were present. Meanwhile, Member (Tax Policy) AKM Badrul Alam and Director General of Center Intelligence Cell Ahsan Habib were present on behalf of the National Board of Revenue.
The DSE delegation also submitted a written proposal to the National Board of Revenue.
In the written proposal, the chairman of DSE mentioned that the capital market is the main driving force of the free market economy. But due to various irregularities and policy inconsistencies, the capital market of Bangladesh has so far failed to play the desired role in the economy. At present, the Bangladesh government, Bangladesh Securities and Exchange Commission, Dhaka and Chittagong Stock Exchanges are working together in the structural reform of the capital market. It is hoped that through the successful implementation of all reform programs and complementary policy support, the country’s capital market will soon be able to stand on a solid foundation and start playing an effective role in the country’s economic development.
The proposal also mentions that through the Income Tax Act 2023, tax exemption on capital gains of more than 50 lakh rupees earned from transfer of shares or units of any listed company or fund to individual taxpayers is withdrawn. As a result, the effective tax rate on such earned income along with surcharge for taxpayers paying tax at the maximum rate of 30 percent comes to 40.5 percent in certain areas. This has diverted individual investors from the capital market and has had a tremendous negative impact on the capital market as a whole. As a result, daily trading on DSE, the country’s main stock exchange, has steadily declined from a peak of Tk 1800 crore in February 2024 to below Tk 300 crore in October 2024. The market index has also declined significantly and the continued fall in the index has created panic among investors. As a result of these market movements and the decline in the index, both the government’s Capital Gains Tax and the transaction tax have fallen significantly. It may be noted here that there is a provision for deduction of tax at source at the rate of 0.05 percent from capital market transactions.
As mentioned in the proposal, we humbly request you to take the necessary steps to fully exempt the income earned on the said capital gains for the individual tax payers as part of the efforts to bring the capital market back to a positive trend. This will not only benefit the capital market, but will also result in a significant increase in turnover tax and capital gains tax as a result of achieving higher transaction volumes.
The proposal also mentions, calculation of tax deducted at source on dividend income from listed companies as final tax for individual investors, reduction of tax at source by 0.05 per cent on transactions of brokerage houses and adjustment of loss assessed from this sector with income from other sectors. Several proposals have been forwarded by the DSE in the past for the National Board of Revenue’s consideration, including permission to carry forward up to six years of assessed losses. It is hoped that the issues of these proposals will also get due consideration of the National Board of Revenue.
The delegation requested the National Board of Revenue to consider and resolve the issues raised by all market intermediaries and investors in order to bring back the dynamics of the capital market.
Chairman of the National Board of Revenue. Abdur Rahman Khan said that he is aware of the proposed issues and taking into consideration the overall economy, capital market development, investors’ confidence etc., a decision will be taken regarding the proposals soon. He requested the delegation to play a leading role of DSE in certain matters including professional conduct of market intermediaries, issuance of certificate of tax deduction at source on dividend income.
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