Thesis Report

Topics: Stock exchange, Stock market, Taxation Pages: 5 (945 words) Published: July 28, 2013
RESEARCH METHODS

Impact of Capital Gain Tax on the Trading Volumes of KSE 30 Index

December 22, 2011
DR. AYUB MEHAR
RAHEEL MUHAMMAD HANIF
9273

ABSTRACT
The real democracy has not been very successful as far as inflation, and poverty is concerned, initiatives taken by Govt. are not being very popular, neither appreciated among the citizens. Karachi Stock Exchange, also refer as KSE is the largest capital market in Pakistan where middle class used to invest their saving and enjoy the dividends, and capital gains offered by the companies. In Jul 1 2010 Capital Gain tax was imposed by the Govt., since then, the volumes of Market have shrunken significantly. This has very much affected the additional income of common man. The purpose of this report is to identify what are the effect and cause on this implementation. The data and statistics in the report have been taken from Karachi Stock exchange and on to that the methodology. Finally our finding that indeed CGT has adversely affected the trading volumes of stock exchanges as such that investor has to provide the National Tax Number to the authorities, when the total numbers of tax payers in the country are about ~2% of the entire population. This has caused a sense of insecurity among the investor who then find another areas to invest their saving resulting in pullout of capital from the capital markets.

Contents
ABSTRACT2
INTRODUCION4
BACKGROUND:4
IMPORTANCE OF RESEARCH:4
OBJECTIVE OF RESEARCH:4
REVIEW OF LITERATURE5
METHODOLOGY6
CONCLUSION:7
RECOMMENDATION8
REFERENCES & BIBLIOGRAPHY9

INTRODUCION

BACKGROUND:
A country whose GDP growth is lowest in the region, unemployment and poverty is a big problem. New employment opportunities are merely none, while keeping the existing opportunities are also very difficult due to adverse law and order conditions; insufficient electricity; highest interest markups, among other factors. In 2010 Govt. of Pakistan announced CGT on all three capital market of Pakistan. The major volumes are been made my individual investors, while implementation of Tax has withdrew the ~56% share from the market resulted in low volumes and more unemployment

IMPORTANCE OF RESEARCH:
This thesis is concerned with the aim to identify whether or not there is a linkage between CGT and trading volumes. The study is therefore very useful for the authorities to determine, if tax is more important or the employment. As creation of culture will takes years, if not decades, to establish. Especially in a country like Pakistan where laws, and there implementations are so unpredictable and investor tend to think if that’s partial or permanent, whether new Govt. will keep continue this or will eradicate.

OBJECTIVE OF RESEARCH:

“To study the impact of CGT on trading volumes of KSE 30 Index”

The main purpose of this project is to study the whether or not there is a linkage between the Capital Gain Tax and Trading Volumes of KSE 30 index

REVIEW OF LITERATURE

METHODOLOGY
HYPOTHESIS:
“CGT has a significant impact on trading volumes

1. Which Type of data is required?
* Data will be required for the following variables;
* CGT [Independent Variable]
* Quarterly Trading Volumes [Dependent variable]

2. Where data is available:
* Website of Karachi Stock Exchange Guarantee Limited
* Daily Business Recorder

3. How data will be collected:
* Website of Karachi Stock Exchange Guarantee Limited
* Daily Business Recorder

4. How data will be use:
* Multiple regression would be use to test the hypothesis.

5. How you will conclude the data:
* On the basis of results, conclusion would be as follows: * If there has been a 40% or more reduction in the trading volumes, we will conclude that CGT has significant relation with trading volumes at stock exchange. * Hypothesis will be accepted, if after sales brings a positive...

References: & BIBLIOGRAPHY
http://www.brecorder.com/market-data/karachi-stocks/stock/568/?currExchange=K&currPageType=Y&currSector=0&currDate=2010-12-31&scrType=1280%7C800
http://www.kse.com.pk/index.php
Month Day Year
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