Sales tax on defence purchases: CBR to approach Military Accountant General

ISLAMABAD (February 17 2007): The Central Board of Revenue (CBR) has decided to approach the Military Accountant General to reconcile data on sales tax collection made on defence procurements by the armed forces. Sources told on Friday that the decision is a part of CBR plan to collect sales tax on supplies made to the government departments.

The CBR has issued instructions to all collectors of sales tax to reconcile sales tax collection on government procurements on priority basis. The Collector, Sales Tax and Federal Excise, Rawalpindi would start an exercise in collaboration with the Military Accountant General pertaining to sales tax collection on defence procurements by March 15, 2007.

The CBR is making arrangements to obtain data on government procurements with the help of PIFRA (Project to Improve Financial Reporting and Auditing). Sources said that the board is working on a Standing Operating Procedure (SOP) to streamline future collection of the sales tax and excise duty on government purchases. Different government departments have been engaged in procurement.

These included federal and provincial government departments, semi-government and autonomous bodies. They purchase different items from the registered suppliers, who collect the bill after deduction of sales tax. In most of the cases, suppliers did not deposit the due amount of tax in the national exchequer.

The CBR is making efforts to expedite registration of undocumented contractors and suppliers unearthed by the collectors of sales tax. Last month, board had constituted a 'Tax on Government/Defence Purchases Committee' for registration of all persons engaged in making supplies to government departments.

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