Tax-free dividend income for investors doubled

Finance Minister AHM Mustafa Kamal has proposed the ceiling for tax-free dividend income up to Tk 50,000 in a bid to encourage stock market investors.

At present, the ceiling for tax-free dividend income for individual investors is Tk 25,000.

"Special incentives will continue for encouraging investment in the capital market," said Mr Kamal, in the proposed budget for the fiscal year (FY) 2019-20 on Thursday.

The Finance Minister also proposed in his budget speech that the double taxation on dividend from listed companies will be removed.

Mr Kamal said a provision was made in the income tax ordinance last year to avoid the multilayer taxation on dividend income.

However, the application of the provision was limited only to the resident companies.

"To promote foreign investment, I propose to extend the application of this provision to the non-resident companies as well", said Mr Kamal.

The Finance Minister said he wants to enhance the limit with a view to incentivizing the small investors and strengthening the capital market.

However, this exemption will only be applicable for the individual taxpayers.

Earlier, both bourses -- the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE)-- in their budget proposals urged the government to increase the tax-free dividend income up to Tk 100,000, considering the bearish market situation.

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