Index fall led to CVT reduction: Shaukat

Staff Report

ISLAMABAD: Finance Minister Shaukat Aziz on Tuesday said the government had decided to reduce the Capital Value Tax from 0.1 percent to 0.01 percent on the purchase value of shares traded in stock exchanges.

Concluding the general discussion on the 2004-05 budget in the National Assembly, Mr Aziz said the CVT was proposed to be levied at 0.1 percent as announced in the budget. However, the CVT was amended due to protests by members of the stock exchanges, which also caused a fall in the index of the stock exchanges, he added.

Apart from the CVT of 0.01 percent, the government had also levied presumptive withholding of income tax at 0.005 percent on the purchase value of shares, he said. Further, a presumptive withholding of income tax at 0.005 percent on the sale value of shares in lieu of the commission income earned by members of the stock exchanges had also been levied, he added. “It has also been agreed with the members of stock exchanges that an adjustable withholding tax at 0.005 percent traded in the stock exchanges on behalf of the clients in respect of trading of shares will also be levied,” Mr Aziz said. A withholding tax at 10 percent on carryover charge (badla) had also been imposed after consulting the stock exchanges, the finance minister added.

Earlier, the minister told the National Assembly that the recommendations made by the Senate had been duly considered. He said the Senate had made 33 recommendations out of which 20 were related to the Central Board of Revenue (CBR) and out of these 14 had been accepted. However, the minister listed seven recommendations that were related to tax measures that would be made part of the finance bill 2004-05 when the National Assembly approved the budget. The remaining recommendations were of procedural matters, he added.

As for customs, the government had decided to withdraw the levy of a five percent customs duty on the import of computer parts on the Senate’s recommendations, the finance minister said. The duty on computers would continue at five percent and the provision of bringing two dutyfree lap top computers in personal baggage will continue.

However, it had been decided to grant a concession of customs duty (zero-rated) on the import of composite diagnostic kits for HIV and Hepatitis, he said. Customs duty on the import of tinned iron or steel and raw materials for the local manufacture of high-pressure laminated sheet (Formica) would also be reduced to five percent to facilitate the local industry, he added.

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