More stimulus for stock market proposed

The finance minister, Abul Maal Abdul Muhith, on Thursday proposed to cut income tax for the merchant banks to 37.5 per cent from existing 42.5 per cent in the proposed budget for the next financial year.

He also proposed a tax waiver on dividend income amounting to Tk 5,000 for individual.

‘If any company transfers 20 per cent of its paid-up capital through initial public offering to the capital market, it will enjoy 10 per cent tax rebate on its payable tax in the relevant year,’ Muhith said in the budget speech in parliament.

The finance minister said the government took different initiatives to rectify the market situation, but during the last one year the market went through massive correction.

In a desperate effort to stabilise the stock market, the government in the budget for the outgoing financial year allowed investment of undisclosed money in the stock market by paying 10 per cent tax.

But, contradictory statements from different government offices over the issue made the market volatile on several occasions last year.

In his budget speech for FY 2012-13, Muhith reiterated some of the previous year’s pledges including demutualisation of the stock exchanges, framing of a financial reporting act and establishing a clearing and settlement company.

Related laws for demutualisation and financial reporting act will be placed before the parliament for approval in the next financial year, he said.