Corporate Tax

Shares fall when the federal government kills corporate tax breaks

Stocks remained under pressure on Friday after the government enacted the ordinance making changes to certain tax laws that would result in the withdrawal of Rs 140 billion in tax exemptions, traders said.

The KSE-100 share index of the Pakistan Stock Exchange (PSX) lost 0.45 percent or 204.54 points to close at 45,521.63 points.

The volume increased from 470.40 million shares in the last trading session to 529.2 million shares.

The ordinance promulgation is one of the previous moves to approve the $ 500 million IMF tranche.

The government had previously promised the IMF that it would introduce the legislation in parliament before March 20, with an agreement that it will come into force on July 1, 2021.

Ahsan Mehanti of Arif Habib Corp said shares closed bearishly under pressure from the stocks across the board amid uncertainty over the outcome of the Rs 700 billion additional government revenue measure, higher electricity tariff and the withdrawal of corporate tax exemptions.

“Investor concerns about the IMF’s terms of budget support, the promulgation of regulations to withdraw tax exemptions, and NEPRA’s autonomy affecting the industrial tariff weighed on trade,” Mehanti added.

The KSE-30 share index lost 0.68 percent or 127.87 points and closed at 18,722.08 points.

There were 391 scrips active, of which 131 were advanced, 238 were rejected and 22 remained unchanged. An analyst at Arif Habib Limited said on the last day of the rollover week, the market lost 289 points during the session.

“The confirmation of the Income Tax Ordinance amendment to go into effect, the Rs 140 billion tax exemption withdrawal had an impact on steel, cement, fertilizer, oil and gas marketing companies, while banking sector stocks also fell due to general selling pressure,” so the analyst said.

The main themes of the rollover i.e. Netsol, TRG Pakistan also ended negatively, with the exception of Attock Refinery (ATRL) which traded positively throughout the session.

A Topline Securities report said the market remained largely under pressure during the day.

The broker blamed pressure on growing COVID cases as the number of cases surpassed the psychological threshold of 4,000 to hit 4,368 (highest number after June 21, 2020).

Habib Bank (HBL), Bank Al Habib (BAHL), Pakistan State Oil, United Bank and Lucky Cement have cumulatively weighed 147 points on the benchmark index.

The companies with the highest gains were Service Industries, which rose Rs 52.53 to Rs 1,064.74 / share and Indus Motor Company, which rose Rs 38.20 to Rs 1,139.01 / share.

The top losers were Bata Pakistan with a loss of Rs 90.6 and a closing price of Rs 1,959.4 / share and Nestle Pakistan with a loss of Rs 57.50 to Rs 5,940 / share.

Byco Petroleum recorded the highest volume with sales of 83.51 million shares.

The scrip won 54 paisas and closed at Rs 11.54 / share. The Pakistani refinery ranked second with sales of 56.42 million shares. It gained Rs1.92 to close at Rs28.53 / share.

Pak Telecommunications ranked third with sales of 39.61 million shares. It won 02 paisas to finish at Rs10.13.

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