Impression of Federal Budget 2017-18 on Stock Exchange Companies

The Federal Budget for the Year 2017-18 floated in Parliament on 26th May, 2017 has a mix impact on the companies listed at Pakistan Stock Exchange. Overall, the investor has to pay more than the previous times. However, some sectors have received a cut in overall tax payment and this can help in ease of doing business and a positive impact on profitability if the companies.

A short impression of Pakistan Budget with reference to Pakistan Stock Exchange (Companies, Investors) is given below:

  • Taxes on dividends increased to 15% from 12.5% (Negative).
  • Capital Gain Tax (CGT) 15% on stock purchased since July 1, 2013 (Negative). Previously CGT rate varied between 7.5%-15% depending on holding period.
  • Corporate tax rate reduced to 30% (Positive).
  • Continuation of Super Tax (companies earning more than Rs500mn to pay additional corporate tax of 3% while banks 4%) (Negative).
  • Minimum Turnover Tax increased to 1.25% (Negative).
  • Rates of taxes on non-filers to be increased across the board (Neutral).

Fertilizers

  • Sales tax on DAP reduced to Rs100 from Rs400 (Positive). Better offtake.
  • Agri loans on reduced mark-up (Positive).

Cements

  • Federal Excise Duty increased by Rs12.5/bag or 25% (Negative). May not be able to pass on the entire amount.

IT / Telecoms

  • Reduction in WHT rates on calls (Positive). Increase in call volumes.

Auto

  • Reduction on WHT for filers on car purchase (Positive). Higher sales of cars.

Steel

  • Sales tax increased (Neutral). Likely to be passed on.

Textile

  • Continuation of measures for 1 year of PM Textile package announced earlier (Neutral).

Oil Marketing

  • Reduction in taxes on sale of lubricants (Neutral to Positive). Some of this may be passed on.

Tobacco

  • Increase in Federal Excise Duty by Rs4/pack or 10% (Negative).
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