The government's revenue earnings from the Dhaka Stock Exchange (DSE) surged 31 per cent month on month in August, with the trading volume on the premier bourse rising on the back of regulatory moves to restore discipline in the capital market.
Market operators attributed the rise in trading volume to the growing confidence of investors on the market.
The government bagged tax revenue worth about Tk 246 million from the DSE in August, up from Tk 188 million in the previous month, according to the DSE data.
The government earned the amount from taxes 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 the taxes on TREC holders' commission and share sales by sponsor-directors and placement holders at the rates of 0.05 per cent and 5.0 per cent respectively and deposits the amount to the government exchequer.
Of the total earnings in August, Tk 186 million came from the TREC holders' commission, popularly known as brokerage commission, and Tk 60 million from the share sales by sponsor-directors and placement holders, the DSE data show.
In July, Tk 60 million came from the TREC holders' commission and Tk 128 million from the share sales by sponsor-directors and placement holders.
The government's revenue earnings from the prime bourse grew substantially in August on the back of increasing trading activities, said a DSE high official.
"The revenue earnings are directly linked to the turnover on the DSE -- the amount of tax will increase with the rise in turnover," said an analyst at a leading brokerage firm.
The turnover marked a substantial rise in August, compared to a month earlier, so did the amount of tax, he added.
The daily average turnover on the DSE in August soared to Tk 9.80 billion, registering a 244 per cent increase from Tk 2.85 billion in July, the DSE data shows.
Out of 19 trading sessions in August, nine sessions saw the daily turnover cross the Tk 10 billion mark.
DSEX, the prime index of the DSE, also surged a cumulative 665 points or 15.77 per cent in August while the DSE market cap recovered Tk 441 billion during the month.
Factors like lower returns on the money market, lucrative price level of listed securities and strong regulatory actions against wrongdoers helped boost the market as well as the government revenue earnings, said a leading broker.
The government's revenue earnings from the DSE hit a 10-year low to Tk 1.04 billion in fiscal year (FY) 2019-20 due to a bearish market trend and suspension of trading activities for more than two months due to Covid-19 outbreak.
The DSE paid taxes 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 DSE paid taxes worth Tk 4.47 billion in the FY 2010-11, the highest in its history, when the market witnessed a wild bullish run before it crashed.
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