Tax revenue from the Dhaka bourse jumped 27 per cent month-on-month in March, thanks to higher share sales by sponsor-directors of the listed companies.
The government collected tax receipts worth Tk 175 million last month as against Tk 138 million in February 2023, according to the Dhaka Stock Exchange (DSE).
Of the total earnings, tax collections from share sales by sponsor-directors soared 63 per cent month-on-month to Tk 83 million but tax revenue from market turnover (except for block trades) declined by 6 per cent to Tk 92 million.
The government earned the amount by collecting taxes on TREC (trading right entitlement certificate) holders' commission and on share sales by sponsor-directors and placement holders.
The DSE, on behalf of the government, collects the tax on TREC holders' commission and on share sales at the rate of 0.05 per cent and 5 per cent respectively and deposited the amount to the government exchequer.
A good number of companies' sponsor-directors such as ADN Telecom, Hakkani Pulp & Papers and Gemini Sea Foods sold their shares in March, which contributed to higher tax collection, said a DSE official.
Three sponsor-directors of ADN Telecom sold 2.75 million shares in the block market while two directors of Hakkani Pulp & Papers sold 0.15 million and two sponsor-directors of Gemini Sea Food sold 0.22 million shares in March.
However, when it comes to the first nine months of this fiscal year, tax revenue from the DSE tumbled 35 per cent year-on-year to Tk 2.15 billion owing to sluggish trading activities.
The ongoing sluggish trading activities and stagnant situation have squeezed the government's earnings from the prime bourse as earning is related to turnover, the DSE official said.
The prime index of the DSE also dropped 163 points or 2.56 per cent in the past nine months through March.
A big chunk of the investors stays off the market that analysts attributed to the floor price set by the market regulator in July 2022.
The market was sluggish during the nine months of the current fiscal year, dragging daily average turnover down 45 per cent to Tk 7.14 billion in July-March.
Floor prices restricting big-cap stocks' movements and investors' lack of confidence played a major role behind the low turnover during the period, said a stockbroker.
The market movement was mostly on a handful of stocks as most other securities remained stuck at floor prices without potential buyers since those were deemed overvalued even at that level.
Large-cap firms, such as British American Tobacco, Grameenphone, Renata, United Power and Singer Bangladesh, which had dominated the turnover chart earlier, have remained unmoved on the bourses.
Big buyers and institutional investors were upset as they could not buy-sell shares due to the price restriction.
Of the total earnings in July-March of FY23, around Tk 1,493 million came from TREC holders as share transaction commission, popularly known as brokerage commission, while Tk 652 million from share sales by sponsor-directors and placement holders.
The government earned Tk 3.60 billion, the highest in 11 years, in the previous fiscal year, driven by record turnovers in a few sessions.
However, the FY '11 saw the historical highest tax revenue of Tk 4.47 billion paid by the DSE to the government exchequer when the market witnessed a wild trend before crashing.