A senior Treasury official yesterday confirmed that the existing exemption on capital gains on sale of shares would continue to remain in force.
“The status quo will remain unchanged even though the Share Transaction Levy was abolished as per the 2016 Budget presented in Parliament by Finance Minister Ravi Karunanayake,” Deputy Secretary to the Treasury S.R. Attygalle told the Daily FT.
At present a 0.3% levy is collected by the relevant stockbroker, stock dealer or custodian bank which is responsible for the settlement of the share transaction. The 2016 Budget proposed the removal of the levy from 1 January 2016.
The move was welcomed by capital markets but there was a concern whether capital gains tax would come into force with the removal. The view was unless specifically exempt trading profit from the sale of shares in the stock exchange becomes taxable.
However the assurance and clarification by Attygalle should lay such concerns to rest. The levy used to bring about Rs. 2.4 billion revenue.
A host of capital market favourable as well as business friendly proposals saw the Colombo stock market gain on Monday but the improvement was short-lived as the Bourse went back to negative mode on Tuesday.
“The removal of the Share Transaction Levy from both the buyer and seller on each transaction is likely to increase market activity,” CT CLSA said in its analysis of 2016 Budget.
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