KARACHI: June 28: A meeting was held between the managing Directors of the three stock exchanges, with Mr MS Lal, Member (Tax Policy & Reforms) on Monday, to discuss and agree on modalities of collection & payment of taxes, introduced in the Finance Act, 2004.

On his return from Islamabad in the evening, the Managing Director KSE, Moin M. Fudda, stated that the issues, agreed to in principal were as under: 1. It was clarified that the tax applicable under sub-section (1) (c) of Section 233A of the Income Tax Ordinance, 2001 is to be levied on Sale Value rather than Traded Value.

2. It was clarified that in view of the new provisions under Section 233A of the Income Tax Ordinance, 2001 the existing provisions in respect of withholding tax on brokerage commission under Section 233 and advance tax under Section 147 of the Income Tax Ordinance, 2001, in respect of the prescribed stock exchange transactions by the members, would be withdrawn.

3. The stock exchanges would collect tax, under each head, as prescribed under the Finance Act, 2004, from the members, across the board, on all trades carried out through its automated trading systems. For any tax exemption/adjustment/refund, the institution/person would deal directly with the tax authorities.

4. The taxes collected by the stock exchanges, on each Clearing Day, would be deposited into the CBR designated account(s) on monthly basis.

5. For the purposes to claim tax adjustments or refunds, by the members/clients, in respect of other than presumptive taxes, the members' bills together with relevant documents, may be considered as evidence of payment of taxes.

The KSE MD said that the stock exchanges and the tax authorities were in the process of making a formal document of the issues agreed, which would be finalized shortly.

Besides the MD of the three stock exchanges, others who attended the meeting included Mr Shahid Ghaffar, commissioner, Securities Market Division of the SECP, Mr Salim Chamdia, director KSE and Mr. Omar Iqbal Pasha, chairman Islamabad Stock Exchange.