Belying the policymakers expectations, only a meagre amount of 'undisclosed' funds, legalised under a controversial tax exemption facility, flowed into the country's bourses until May 25 of the current fiscal year (FY).
An amount of Tk 2.82 billion, which is only 1.9 per cent of the total Tk 144.59 billion worth of undisclosed income declared by 10,404 people during the period under the government's blanket opportunity, was invested in stocks, according to the latest figures.
The National Board of Revenue (NBR) data showed that Tk24.13 billion was invested in the real estate sector and Tk 116.63 billion in some other sectors.
The NBR received Tk 14.45 billion in taxes on the money disclosed.
The opportunity to declare undisclosed income paying tax at a flat rate of 10 per cent is unlikely be extended beyond June 30 this year, officials said.
Over a period from FY2005-06 to FY2019-20, some Tk 145.95 billion undisclosed income was declared in the income tax returns.
Managing director (in charge) of Dhaka Stock Exchange (DSE) Abdul Matin Patwary said the condition imposed against declaring the undisclosed income for investment in capital market might have driven away many investors.
Many of the investors first declared cash to legalise their income and then invested in the capital market complying with ceretain conditions, including holding the shares for one year, he said.
The bourses could not attract the money directly as the people wanting to invest are required to declare their undisclosed funds to the taxmen first, he added.
He, however, demanded continuation of the existing black money whitening facility with some relaxations in the conditions only for the capital market investors to help make the market vibrant.
Continuation of such opportunity for the time-being is necessary for the share market to bring the black money into the formal economy, he added.
He said the contribution of capital market to the country's GDP would be 20 per cent, which is 70 per cent in India.
The country's stock market has been buoyant for quite some time and the main index of the Dhaka Stock Exchange (DSE) crossed the 6000-mark in many months even during the pandemic. Many had thought that flow of undisclosed money into the market was playing a role in the ongoing rally. But that seems not true, said a market insider. The holders of such funds are not interested to keep their money invested in stocks for a year, he added.
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