The government has constituted a five-member committee to resolve the issue of 0.1 percent capital value tax (CVT) levy on purchase of shares.
Addressing a post-budget press conference here on Monday to explain the tax incentives and concessions given to investors, CBR Chairman Abdullah Yousuf said that the committee comprises chairmen of Karachi, Lahore, and Islamabad stock exchanges, and representatives of Securities and Exchange Commission of Pakistan (SECP) and Central Board of Revenue (CBR).
The committee would examine the recommendations made by stock exchanges to be submitted within a week and forward its findings to the government for addressing the grievance of stock market.
He said that all three bourses have approached Ministry of Finance and CBR for withdrawal of CVT on shares trading. The officials of CBR, SECP and chairmen of all three stock exchanges late on Sunday night convened a detailed meeting on the issue. However, the demand of stock exchanges for withdrawal of CVT is still there, CBR Chairman said.
Yousuf pointed out that the CVT has not been levied, but it is proposed under the Finance Bill 2004.
It is important to note that the daily turnover of shares on stock exchange is around Rs 70,000 million. Capital gain on such shares is exempt up to tax year 2005, which has been extended to tax year 2007. Keeping in view the extensive tax-free income being generated in this business, the capital value tax (CVT) on purchase of shares at the rate of 0.1 percent of the value of the shares transacted has been proposed.