Karachi, January 6, 2025 – The Pakistan Stock Brokers Association has voiced concerns regarding the proposed Section 114C of the Income Tax Ordinance, 2001, introduced as part of the Tax Law (Amendment) Act, 2024.
In a letter addressed to Finance Minister Muhammad Aurangzeb, the association highlighted potential repercussions of the amendment, currently under review in the National Assembly. The proposed changes aim to enhance economic documentation and compliance mechanisms but have raised alarm within the financial sector, particularly among stock brokers and investors.
The proposed Section 114C imposes restrictions on economic transactions by certain individuals and entities, specifically targeting ineligible persons. The provision reads:
“114C. Restriction on economic transactions by certain persons. (1) Notwithstanding anything contained in any law for the time being in force –
(c) any person authorized to sell securities, including debt securities or units of mutual funds, or to open and maintain accounts or clear such transactions, shall not sell, open an account, or clear the sale of securities or mutual funds for an ineligible person being an individual or an association of persons;
(2) The provision of sub-section (1) shall not apply to –
(d) investment in securities up to such limit as may be notified by the Board from time to time.”
The stock brokers acknowledged the government’s intent to enhance economic transparency and strengthen compliance. However, they warned that implementing the amendment without consulting key stakeholders could adversely affect the stock market and undermine investor confidence.
“The amendment, if passed in its current form, could create operational challenges for brokers and discourage potential investors, thereby hindering market growth,” the association stated.
To address these concerns, the Pakistan Stock Brokers Association has requested an urgent meeting with the finance minister. The objective is to discuss the implications of Section 114C and collaboratively identify solutions that ensure the integrity of the stock market while achieving the government’s policy goals.
The association emphasized the need for a balanced approach that accommodates the interests of all stakeholders, safeguarding the financial sector’s stability and fostering sustainable growth in Pakistan’s capital markets.