ISLAMABAD, June 16: The representatives of the three stock exchanges have proposed to the government to levy 0.01 per cent income tax on purchase and sales of shares in lieu of the proposed levy of 0.1 per cent Capital Value Tax on the shares.

Informed sources told Dawn on late Wednesday night that the the representatives had also proposed imposition of carry over charges (COC) at 10 per cent of withholding tax but withdrawal of 10 per cent withholding tax on brokerage.

These proposals were discussed at length during the first meeting of the five-member committee to formulate recommendations on the proposed levy of 0.1 per cent as Capital Vale Tax here on Wednesday in the Central Board of Revenue (CBR).

According to the sources, all these proposed measures were put forward by the representatives with the argument that they would help the tax authorities to raise around Rs1.35 billion from the stock trading and that it was a progressive tax and would increase with the passage of time.

The CBR has projected around Rs6 billion revenue from stock trading in the budget documents, which they have included in the annual revenue target of Rs580 billion for the fiscal year 2004- 05.

If this levy was withdrawn, the sources said, either CBR would have to reduce the target or come up with new taxation measures of more than Rs5 billion. The CBR was represented by member tax policy and reform, M. S Lal, the sources said and added he would discuss the proposals with the Chairman CBR M. Abdullah Yousuf.

According to these sources, the chairman will discuss the proposals in detail with the finance minister, Shaukat Aziz before taking any final decision in this regard.

According to the sources, it was likely that the second meeting might be held on Thursday evening for finalizing the proposals. The sources said that it was likely that the government might withdraw the proposed levy of CVT within the next two days.