KARACHI: The Pakistan Stock Exchange (PSX) is set to attract more investment benefits from the corporate sector due to reduction in capital gain tax, abolition of withholding tax on trade and the margin financing announced in the budget for the next fiscal year.
“Capital gain tax has been reduced from current 15 per cent to 12.5 per cent for the next fiscal year,” the finance minister Shaukat Tarin announced during the budget speed today. “And it will be reduced further going forward.” The withholding tax on capital market transactions and margin financing has also been abolished. Pakistan’s capital market has been resilient against the global slowdown due to the COVID-19 pandemic. The main reason behind this was the investment-friendly policies formulated by the government.
“This measure will help capital market gain and attract portfolio investment,” Khurram Schezad, CEO Alpha Beta Core, an investment advisory firm, said in a phone interview from Karachi. “The growth in major sectors will also help companies to provide market strong base for gains.”
For example, auto industry sales will benefit as the sales tax on small vehicles manufactured locally has been reduced from 17 percent to 12.5 per cent and value-added tax (VAT) has been abolished. While the government has decided to abolish VAT on 800 cc vehicles manufactured locally. Furthermore, the government has also announced 16 per cent reduction in sales tax on electric cars.
“In addition to this, there are also some steps in the budget that will help growth in textile, pharmaceutical, power generation, housing, and construction sectors that will lead to growth in capital market also,” he added.
