Analysts termed the federal budget positive for capital market as no new tax was imposed on stocks. However, they said that the budget would be negative for textile, cement, auto and refineries sectors. They said that the measurers announced in the budget will help increase revenue. Muhammad Sohail, senior analyst and Chief Executive of Topline Securities said that the budgetary measurers will help increase revenue and bring fiscal discipline and stabilization as advised by International Monetary Fund (IMF).
He said measures on property valuation, non-tax filers and presumptive tax will support bringing down primary deficit. Ahsan Mehanti at Arif Habib Corporation said that overall budget was positive for the country's capital market as no new tax was imposed on stocks. An analyst at JS Global Capital said that the budget would be negative for textile sector due to increase in sales tax on finished textile goods to 15 percent, withdrawal of zero rating for the textile sector, automated and immediate payment of sales tax refunds to textiles and 10 percent tax on ginned cotton which was previously exempt.
The budget would also be negative for cement sector as increase in FED is proposed on cement bags from Rs 1.5/kg to Rs 2/kg (effectively Rs 25/50kg bag cost increase).
The budget would also be negative for auto sector due to proposed to impose federal excise duty (FED) at 2.5 percent on up to 1,000cc cars, 5 percent on 1,001-2,000cc and 7.5 percent on over 2,000cc cars (earlier, 10 percent FED was imposed on over 1,700cc cars).
The budget would also be negative for refineries due to exemption of duty is proposed for import of plant and machinery for setting up hydrocracker plants for oil refineries.
However, the budget would be neutral for banking sector as the State Minister for Revenue mentioned that Treasury Single Account (TSA) to be implemented.
For OMCs, the budget would be neutral due to exclusion of 3 percent VAT on all OMC products (previously it wasn't on deregulated products like FO). The budget would be neutral for IPPs as the tax on dividend income has been proposed to be increased from 7.5 percent to 15 percent. The budget would be neutral for pharmaceutical sector due to reduced duties by 3 percent on ingredients of pharmaceutical products.