The government is likely to take several steps for reviving the capital market and the real estate sector, including a cut in tax for flat purchase, in next fiscal year’s budget.
As part of the steps, the government may increase the tax exemption limit of dividend earnings to up to Tk 50,000 from the existing Tk 25,000 ceiling considering the current market scenario, said a senior official of the finance ministry yesterday.
Retail investors said they have been losing money in the stock market in the last few years due to sluggish market and to compound their woes the government is deducting their dividend income by way of taxes.
The stock market has largely underperformed in the last nine years punctuated with bouts of gains.
During the period, DSEX, the benchmark index of the Dhaka Stock Exchange, hit a peak of 6,336.88 points. But it is still lower than what prevailed in 2010.
In 2010, the general index was above 8,000 points and the daily turnover was about Tk 3,249.57 crore.
But now, the daily average turnover is ranging between Tk 220 crore to Tk 500 crore and the benchmark index stands at 5,253 points.
Like the stock market, the real estate sector has been subdued too.
To give it a lift the government is mulling over slashing the tax by 20 percent on an average in fiscal 2019-20’s budget, the finance ministry official said.
At present, the government’s tax on flat purchase varies from Tk 600 to Tk 7,000 per square metre in Dhaka and its adjacent areas.
It is Tk 5,000 per square metre if the apartment size is below 2,000 square metres in posh areas like Gulshan, Banani and Baridhara. For flats of more than 2,000 square metres, the tax is at Tk 7,000 per square metre.
In other parts of Dhaka, the rate is lower. For outside of Dhaka the tax is Tk 600 per square metre.
Currently, in case of land sales the registration fee is 17 percent and for flat purchase it is 14 percent to 16 percent.
The government may slash the registration fee by half, he said.
Like the retail investors in stock market, the realtors too are complaining of dull business.
In many cases, the realtors are not completing the construction works of the buildings for years, leaving the flat buyers in the lurch.
“If the government takes some measures, the real estate business may boost up again,” said Toufiq M Seraj, managing director of Sheltech, a leading real estate company.
The price of flats in fact decreased this year compared with the price level of fiscal 2012-13, said Seraj, also a former president of the Real Estate and Housing Association.
But the high registration cost and taxes pushed up the overall cost of real estate.
As a result, flat purchase became difficult for fixed income people, he added.