ISLAMABAD, April 15: The government has decided to set up direct tax system on functional basis in order to reduce the interaction between the taxpayers and tax collectors.

The new system is likely to come into force from July 1, 2002, said member direct taxes and CBR official spokesman Vakil Ahmed Khan.

Addressing a seminar on new income tax policy and its impact on market confidence and economic growth, here on Monday, he said that the restructuring of CBR would mainly focus on framing direct tax policy.

Elaborating the function of the new system, Mr Khan said that taxpayer service unit will be created across the country for the taxpayers to file their annual tax returns.

Under the new system, the audit unit will carry out audit of these returns filed by the taxpayers, adding that the audit will be based on para basis.

Enforcement division will solely deal with the collection of revenue under the head of direct taxes. Legal division, he said, will look after filing of appeal in courts.

Replying to a question, he said the taxing of perquisites of the salaried class has yet to be decided.