ISLAMABAD, June 14: The government has constituted a committee to formulate recommendations on the proposed levy of 0.1 per cent as Capital Value Tax on the purchase of shares.

Addressing a news conference here on Monday, Central Board of Revenue chairman M. Abdullah Yousuf announced that the committee comprising representatives from the three Stock Exchanges, Security and Exchange Commission of Pakistan and CBR would submit their report shortly.

Answering a question, he said final decision in this regard would be announced following the recommendations of the committee. Elaborating the impact of the tariff rationalization, the CBR chairman said it would help in enhancing investment in the country, which, according to him, would generate more employment.

He said the proposed reduction in the tariffs would also result in reducing the input cost of products, making these more competitive with other countries' products. Admitting flaws and loopholes in the tax laws, he said these resulted into huge tax evasion in the past. Measures had been taken in the budget to plug these loopholes to generate more revenue, he added.

Replying to another question, he said the CBR would achieve the annual target of Rs510 billion comfortably. He defended the projected target of Rs580 billion fixed for the year 2004-05. The tax relief announced in the budget would have no tangible effect on the revenue collection in fiscal year 2004-05, he said.

By doing away with the levy of further tax, he added, the issue of fake and flying invoices would be controlled, which had been causing a huge loss to the national kitty. Furthermore, he said, it was decided that sales tax would not be collected upfront on cotton, which would also help in controlling the leakages.