The Central Board of Revenue (CBR) is considering levy of central excise duty (CED), in value added tax (CVT) mode, on services provided through ''Vehicles Tracker System'' and companies engaged in installation of burglar alarm systems, in budget 2005-2006. Sources told Business Recorder on Monday that the CBR has drafted a proposal to bring these services into the tax net. The CBR chairman has repeatedly admitted, in different fora, that expansion of tax net to undocumented sector is vital to develop a healthy tax culture.
The alarm systems include professional security alarm systems, electronic security systems and fire alarm systems for home or business. It also includes alarm control panels, sensors, motion detectors, wireless motion detectors and smoke detectors.
Sources said that the CBR may introduce an amendment in the Federal Excise Act, 2005 to bring services provided by the ''Vehicle Tracker System'' (VTS) within the tax net. Recently, the CBR issued a clarification that the central excise duty (CED) will not be applicable on the services provided by the VTS. However, the CBR has the authority to levy CED in VAT mode on any service, without consultation with provinces.
As per earlier clarification, the Board had informed the collectors of sales tax, that since the vehicles tracking services are not specifically mentioned in the SRO.333(I)/2002 of June 15, 2002, and are rendered using telecommunication satellite facility for data transmission only from an implanted device in the vehicle (by use of global positioning system technology to signal the location of the vehicle via SMS messages over a mobile phone network).