ISLAMABAD, May 9: The government is considering a proposal to raise the rate of capital value tax (CVT) on purchase of share through stock exchanges from 0.01 per cent to 0.1 per cent during the budget for 2005-06. Informed sources told Dawn on Monday that tax officials were considering various options, including raising the rate of CVT in order to obtain maximum revenue from the stock exchanges.

The government in the budget 2004-05 had announced CVT at 0.1 per cent but following the recommendation of a five-member committee constituted by the government, the duty was revised to 0.01 per cent. The tax officials were expecting to raise Rs6 billion through 0.1 per cent CVT on shares.

According to statistics, the CBR had already raised Rs2.162 billion in eight months (July-February) of the current fiscal year under CVT and withholding tax on the purchase and supply of shares of three stock exchanges. The revenue realization from the stock exchanges has already surpassed the annual target even in eight months of the current financial year.

The CBR projected over Rs2 billion to be collected under CVT and withholding tax from stock business during the full financial year 2004-05. The government had levied 0.01 per cent CVT on the purchase of share through stock exchange and 10 per cent withholding tax from share business on the stock exchanges during the budget 2004-05 with an aim to raise maximum revenue from this sector.