CBR's bid to bring potential units in tax-net

ISLAMABAD (May 24 2007): The collectorates of sales tax have started verifying third-party information, including gas/electricity data to bring potential units into the tax net for increasing number of registered persons by end of the outgoing fiscal 2006-07.

The Central Board of Revenue (CBR) on Wednesday issued instructions to the field formations to launch the registration campaign. According to the board's instructions, collectors should establish 'Dedicated Cells' at the level of Collectorates to rely on third party information. The instructions should be followed by all regional collectors except Large Taxpayer Units (LTUs) and a report would be submitted by June 15, 2007.

Sources said that data from utility agencies would help the authorities in determining the actual turnover of business taking into account the electricity and natural gas consumption by these units particularly manufacturers.

They said the registration campaign through third-party data has nothing to do with the harsh provisions of section 38B (third party information) of the Sales Tax Act, 1990, under section 38B, sales tax officials are empowered to obtain information in the cases requiring investigation, other than the cases of tax fraud.

The verification exercise would be conducted with the help of data available with the utility agencies without invoking investigative provisions of section 38B for this purpose.

Sources said there are cases where suppliers of government departments are not paying any sales tax. The collectors would ensure GST recovery and registration of all such persons engaged in making supplies to federal/provincial governments and semi-government departments. These departments have been engaged in purchasing different items from the registered suppliers, who collect the bill after deduction of sales tax. In most of the cases, the supplier did not deposit the due amount of tax in the national exchequer. The registration drive would also cover supplies made to the government departments, sources said.

It is important to mention that the board had empowered the collectors to compulsorily register any person, providing excisable services, including Pakistani and foreign airlines, commercial banks/financial institutions, foreign exchange dealers, exchange companies, money changers, cable operators, and service-providers of vehicle tracker/burglar alarm systems.

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