The government collected mere Rs 1.23 billion in capital gains tax (CGT) out of the stock transactions in the first half of the current fiscal year, which was almost one-seventh of the amount generated under the heading during the same period in the last fiscal year.
At a time when the government is struggling to manage adequate funds from tax collection, the performance of capital gains tax also appeared pathetic due to a heavy fall in the transaction of shares in the country’s secondary market. The amount collected during mid-July 2022 and mid-January this year was just 15.26 percent of Rs 8.068 billion collected under the heading in the review period last year.
According to the stockbrokers, the CGT collection was hit by a heavy fall in share transactions after the secondary market went to a bearish trend for a long time during the review period. The market opened at 2,029.43 points at the beginning of the current fiscal year and fell to as low as 1,815.14 points. Likewise, the daily turnover amount even fell to half a billion rupees for many days.
The government levies five percent CGT on long-term investors whereas it is 7.5 percent for short-term investors. The investors selling shares purchased within one year are considered as short-term investors while those selling the shares after one year of purchase are long-term investors.
Of the settled tax of Rs 1.23 billion, short-term investors paid Rs 744.15 million (60.5 percent) whereas the long term investors contributed Rs 491.55 million (39.5 percent). The contribution from short-term investors and long-term investors in the review period last year was 65.59 percent and 34.41 percent, respectively, according to the CDS and Clearing Limited.
This year, the government is struggling to manage funds to meet its financial liabilities. In the first six months of the current fiscal year, the revenue collection was just 33.93 percent of the annual target amount of Rs 1.403 trillion.
Likewise, the government’s revenue collection fell short of the total expenses by Rs 81.50 billion. The government spent Rs 455.12 billion in regular expenses, which was 12 percent more than the amount allocated under the heading during the review period last year.
