ISLAMABAD: Pakistan’s stock market today reacted negatively to the new budget for the fiscal year 2022-23. The KSE-100 index of Pakistan Stock Exchange lost 760 points on Monday around 12 Noon, rejecting the federal budget. Monday is the first working session for the stock market after the announcement of new budget on Friday evening (June 10).
The US dollar also gained more value and in the inter-bank trading, its rate increases to Rs104 while in the open market, the dollar became dearer, around 207 to 208 rupees on Monday noon.
The stock market opened on a positive note on Monday and the benchmark index remained at 42,000 points, but within an hour the market manipulators realized that the budget was anti-stock market, which derailed the bullish sentiment and the KSE-100 index plummeted to over 750 points till 12 Noon.
The trading volume amounted to 1.39 billion rupees while 26.28 million shares were trading at the stock market.
In the new budget, the federal 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Tax rebates on investments in mutual funds withdrawn which is another negative development for capital market.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.
