The decision was taken at a meeting held to discuss the proposals regarding CVT here on Wednesday.
Member Tax Policy M S Lal, Securities and Exchange Commission of Pakistan (SECP) Director Shahid Ghaffar and all the heads of the three stock exchanges attended the meeting.
It was also decided that these heads would meet Finance Minister Shaukat Aziz on Thursday to finalise the proposals.
The proposals include Rs 1.2 billion tax from 0.02 percent levy on each share bought in the market where each buyer and broker would contribute one paisa. On the basis of 500 million average daily trading with an average price of Rs 50 per share in the market in 240 working days, the amount received would be Rs 1.2 billion during a year.
Karachi has a daily turnover of 400 million, while that of Islamabad and Lahore 100 million.
The second tax would be 10 percent of badla financing. Annual weightage average of badla is 12-14 percent, while the Karachi market has capped it at 18 percent. A 10 percent tax on this interest profit could contribute almost Rs 250 million in the form of taxes to the federal government.
Earlier, three proposals, including taxing carry over transaction (COT), brokerage commission and difference in bill of daily trading were deliberated upon by the government and three bourses' chiefs.
Brokerage commission was calculated at almost Rs 500 million at the rate of 5 percent that will reach around Rs 1 billion by making it 10 percent. The 'difference bill' is the difference in earning on buying and selling of shares in a day.
The COT (badla financing) is lending money for daily trading. Currently, badla share is at 13-14 percent in the market, which can be taxed.
The Central Board of Revenue (CBR) has estimated Rs 7-9 billion earnings from 0.1 percent CVT, but according to market sources, this levy would severely effect the trading environment.
However, the government has reduced the target of CVT to Rs 4 billion and further slashed it to Rs 1.25 billion during the discussion. However, other sources present in the meeting denied these figures, saying that different figures were discussed without reaching an agreement.
A statement was also issued by the Finance Minister's office for heads of three stock market's, saying that the government is fully aware of the situation prevailing in the market and for resolving the matter a committee has been formed.
The proposals include tax on badla financing through a proper mechanism with the assistance of the CBR.
The stock exchanges have proposed to assist CBR for tax collection on trading gains and voluntary payment of tax on brokerage commission.
On last Sunday, the management of the three stock markets was advised by the brokers to lock the trading for indefinite period or at least for two days unless an agreement is reached between the government on the issue of announcement of imposing 0.1 percent CVT on buying of shares.