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The government's revenue earnings from the Dhaka Stock Exchange (DSE) fell nearly 4.0 per cent in the first month of the current fiscal year, after hitting 10 years low in the last fiscal.
Market analysts said the sluggish trading activities due to Covid-19 pandemic coupled with low share sales by sponsor-directors impacted the government's revenue earnings from the DSE in the first month of the Fiscal Year (FY) 2020-21.
The government bagged revenue worth Tk188 million in July, 2020 which was Tk 195 million in July, 2019, according to data available with the DSE.
The government earned the amount on TREC (trading right entitlement certificate) holders' commission and share sales by sponsor-directors and placement holders.
The DSE, on behalf of the government, collects tax as TREC holders' commission and share sales by sponsor-directors and placement holders at the rate of 0.05 per cent and 5.0 per cent respectively and deposits the amount to the government exchequer.
Of the total earnings during the month, Tk128 million came from the TREC holders' commission, popularly known as brokerage commission, while Tk60 million came from the share sales by sponsor-directors and placement holders, the DSE data shows.
In July last fiscal year, Tk 105 million came from the TREC holders' commission and Tk 90 million came from the share sales by sponsor-directors and placement holders.
"Declining turnover value hit the government earnings from the DSE in the first month of the current fiscal year," said an official of the premier bourse.
"The earnings are related to turnover. It's usual that tax will fall if turnover declines," said an analyst at a leading brokerage firm.
He noted that as the turnover marked a decline in July this year compared to the same month last year, so did the tax.
The daily turnover, another important gauge, came down to Tk 2.85 billion on average in July 2020, down 29 per cent over the previous year's July.
DSEX, the benchmark index of the DSE, however, gained 228 points or 5.72 per cent in July this year.
The government's revenue earnings from the DSE hit more than 10 years low to Tk 1.04 billion in the last fiscal year (FY) 2019-20 due to bearish market trend and suspension of trading for more than two months due to Covid-19 outbreak.
The DSE paid tax worth Tk 2.72 billion in FY 2011-12, Tk 1.27 billion in FY 2012-13, Tk 1.54 billion in FY 2013-14, Tk 1.74 billion in FY 2014-15, Tk 1.58 billion in FY 2015-16, Tk 2.46 billion in FY 2016-17, Tk 2.33 billion in FY 2017-18 and Tk 2.51 billion in FY 2018-2019 on TREC holders' commission and share sales by sponsor-directors and placement holders.
However, the government raked in Tk 4.47 billion in the FY 2010-11, the highest in its history, when the market witnessed a wild trend before crashing.