KARACHI: Pakistan’s stocks on Thursday rallied to a record high, driven by a sharp rise in cement and telecom companies, dealers said on Thursday.
The Karachi Stock Exchange’s (KSE) benchmark 100-share index closed 1.94 per cent, or 433.15 points, higher at 22,757.72.
The DG Khan Cement Company Ltd rose 4.99 per cent at 84.51 rupees, while Pakistan Telecommunication Co Ltd was up 4.98 per cent at 23.59 rupees.
The government’s proposed budget, which aims to narrow the fiscal deficit to 6.3 per cent of gross domestic product in 2013/14, also supported the market.
The rupee ended steady at 98.50/98.55 against the dollar. Overnight rates in the money market remained flat at 9.40 per cent.
Meanwhile the new Pakistani government in the national budget for the new fiscal year, which begins next month, has proposed a bevy of new taxes to raise over Rs200 billion ($2 billion) with a view to taking the overall tax collection target of about Rs2,500 billion ($25 billion).
The budget proposes to raise Rs209 billion through new taxes -direct and indirect. The government of Prime Minister Nawaz Sharif, barely 10 days in power, hopes these measures will help achieve next year’s revenue target of Rs2,475 billion. The revenue target for fiscal year 20012-13, which ends on June 30, was Rs2,007 billion.
A 0.5 per cent income support levy on movable assets such as cash, gold and cars has been introduced to raise Rs6 billion.
The government is expected to realise an additional amount of Rs63.5 billion through sales tax, Rs18.5 billion through federal excise duty (FED), Rs1 billion through customs duty and Rs35 billion through administrative measures such as plugging loopholes in income tax and sales tax.
People in the low-income group will be hit by the measures the most. Most of income tax revenue measures worth Rs83 billion are proposed in an effort to help documentation. A relief of more than Rs3 billion in income tax has been given mostly to industrialists.
An increase has been envisaged in the number of slabs for salaried persons to 12 from six. The tax rate on those whose annual salary exceeds Rs7 million has been raised. The tax slabs on property income have been increased to six from three.
A withholding tax has been proposed at a rate of 10 per cent on the profit/mark-up/interest earned on transactions of margin financing, trading financing and lending.
The minimum tax is enhanced to 1per cent from 0.5 per cent for companies, certain individuals and associations of persons in case of declared losses” a minimum tax proposed at a rate of Rs25 per square foot of the constructed area sold and Rs50 per square yard of the area sold of the developed land by builders and developers.
Distributors, manufacturers or commercial importers will withhold 0.5 per cent withholding tax from retailers.
The rate of tax on registration of motor vehicles will be Rs7,500 on a vehicle of engine capacity up to 1000cc, Rs12,500 on 1001cc to 1199cc.
The withholding tax on payment of prize money on prize bonds is enhanced to 15 per cent from 10 per cent and initial depreciation for companies’ plant and machinery is reduced to 25 per cent from 50 per cent.
The exemption limit for investment in national saving certificates is proposed to be withdrawn. Income tax exemptions to employees of airlines, teachers, researchers and university and educational institutions established for profit purposes are withdrawn.
In addition to the existing 16 per cent, a 5 per cent sales tax is proposed on non-registered commercial and industrial consumers of electricity and gas having monthly bill in access of Rs15,000.
The FED at the rate of 40 paisa per kg on imported seeds, Rs1 per kg on locally produced oil and 10 per cent ad valorem on motor vehicles of cylinder capacity of 1800cc or above is imposed.