Dhaka, Bangladesh (BBN)- The Dhaka Stock Exchange (DSE) hailed the government for laying emphasis on capital market in the upcoming budget, saying the incentives proposed in the budget will help to expedite the capital market.

“The budget proposals were capital-market friendly and showed the government’s willingness to stabilise as well as to improve the capital market,” said DSE chairman Justice Siddiqur Rahman Miah on Sunday at a post-budget press briefing held at the DSE premises.

“The budget proposals for capital market would also create a positive impact in the stock market,” said Mr Rahman adding that it will attract more companies to go public for further expansion which will accelerate industrialisation in the country.

The Finance Minister AMA Muhith on Thursday proposed a set of fiscal measures in the next budget, including corporate tax rate cut for listed companies by 2.5 per cent and also trim down the tax rate for other listed companies to 25 per cent.

Tax free dividend income limit has been raised to Tk 25,000 while 5.0 per cent tax at source on interest income of Treasury bond and Treasury bill has been withdrawn to ensure the development of the bond market.

The budget also relieves merchant banks and stock brokers from complex calculations by withdrawing the existing provision of 10 per cent deduction at source on income from share market by any company or partnership. Capital gain tax will be finalized at the time of annual tax filing.

The finance minister also proposed to discontinue the tax waiver for the companies that declares 30 per cent dividend. The condition to impose 35 per cent tax has also been withdrawn if the dividend is less than 10 per cent.

The budget also proposed that if any company offload 20 per cent of its paid-up capital through Initial Public Offering (IPO) to capital the market, it will enjoy 10 per cent tax rebate on its payable tax in the relevant year.

In the Finance Bill 2015, a new provision for imposition of Tk 0.1 million as penalty on corporate taxpayers has been proposed for submitting fake audit reports. The respective taxpayers will also be liable to be punished with imprisonment.

Welcoming the punitive measures, Mr Bala, said, the punitive measures will help to reduce the malpractice of submitting fake audit reports.

Mr Bala also urged the government to pass the Financial Reporting Act as soon as possible to ensure transparency and accountability in stock market.

Referring to the pension fund in the proposed budget, which will be invested in different portfolios to implement welfare programmes for the pensioners, Mr Bala, said it will create an opportunity to invest in the capital market.

Mr Bala also urged the government to provide full tax exemption facility for five years of the bourse, instead of existing partial exemption at graduated rates, for sustainable growth and smooth operation of the exchange.

BBN/BB/AD-07June15-11:30 pm (BST)