Govt earning from DSE falls 17pc in four months

The government`s revenue earnings from the prime bourse fell 17 per cent year-on-year in the first four months of the current fiscal year (FY) as trading volume was on the decline.

Market insiders said in tandem with the falling trade volumes, the government earnings from the premier bourse fell as earnings is related to trading volume.

The government bagged tax worth about Tk 459 million in the first four months for July-October period of the FY 2016-2017, which was Tk 553 million in the corresponding period of the previous fiscal, according to statistics from the Dhaka Stock Exchange (DSE).

The government earned the amount on TREC (trading right entitlement certificate) holders` commission and share sales by sponsor-directors and placement holders.

Of the total revenue earnings of Tk 459 million in the first four months of the FY 2016-17 for July-October, Tk 353 million came from the TREC holders` commission and Tk 106 million came from the share sales by sponsor-directors and placement holders, the DSE data showed.

The DSE, on behalf of the government, collects the tax as TREC holders` commission and share sales by sponsor-directors and placement holders at the rate of 0.05 per cent and 5.0 per cent respectively and deposits the amount to the government exchequer.

On the other hand, the government collected Tk 553 million in the first four months of the FY 2015-16. Of them, Tk 384 million came from TREC holders` commission and Tk 169 million came from share sales by sponsor-directors and placement holders, according to DSE data.

However, month-on-month government`s earnings from DSE rose 43 per cent in October as total revenue earning stood at Tk 156 million in October which was Tk 109 million in September, 2016, the DSE data showed.

Meanwhile, DSEX, the benchmark index of the DSE, fell around 100 points or 2.15 per cent in October to settle at 4,592 in the last session of October.

"The earnings are related to turnover. It`s usual that tax will fall if turnover declines," said an analyst at a leading brokerage firm.

"The turnover marked a decline in July-October period of the current FY compared to same period of the previous fiscal, so did tax," he said.

DSE data showed that in the last five fiscal years, the revenue earnings of the government from the stock market declined due to lower turnover value following slide in shares prices.

DSE paid tax worth Tk 2.72 billion in the FY 2011-12, Tk 1.27 billion in the FY 2012-13, Tk 1.54 billion in the FY 2013-14, Tk 1.74 billion in the FY 2014-15 and Tk 1.58 billion in the FY 2015-16 on TREC holders` commission and share sales by sponsor-directors and placement holders.

However, DSE paid tax worth Tk 4.47 billion in the fiscal year 2010-11, the highest in its history, when the market saw a bullish trend.