The National Board of Revenue is planning to engage third party for installing electronic cash register devices in shops and providing maintenance and after-sales services to ensure collection of value-added tax from the business entities and prevent evasion of the tax.
Under the plan, the revenue board will enter into a revenue sharing agreement with the selected vendor which will get a certain percentage, most likely 1-2 per cent, of the total VAT to be collected from retail outlets having ECR, officials said.
They said that the VAT Online Project of the revenue board was working on the issue and preparing a business module for revenue sharing method.
A summary will be sent to finance minister AMA Muhith for his approval after taking permission from the revenue board.
The VOP will invite tenders for selecting firm for the service if it gets approval from the minister.
According to the plan, the ECR machine supplying company will also provide maintenance services to the shops.
Officials of the NBR said that the VOP was considering the model so that shopkeepers could get instant after-sales services from the vendor.
The incentives will encourage the supplier to ensure the devices always remain operational, they said, adding that maintenance and after-sales services would not be ensured without incentives.
The revenue board since 2009 has been trying to ensure installation of ECR machines in shops under 11 categories including hotels, restaurants, sweetmeat shops, departmental and general stores, jewellery, all shops at shopping malls in metropolitan areas, and medium and large wholesale and retail shops across the country.
But, it made a very little progress over the years as only around 3,000 shops across the country installed the devices though the field-level VAT offices identified 11,005 shops eligible for using the technology.
There are 38,000 VAT-paying units under the 11 categories of trade.
There are allegations that the shops hardly issue VAT challan using the ECR as they either keep the devices non-operational or the devices remain out of order.
In this context, the VAT authority since 2015 has been trying to ensure installation of ECR machines at the selected shops and decided to procure 10,000 ECR machines and distribute those among traders at a subsidised rate.
Later in October last year, the VOP dropped the plan of providing ECR to shopkeepers citing complexities in maintenance and after-sales services and decided to introduce a more sophisticated version of ECR known as electronic fiscal management system or electronic fiscal device.
Under the system, all ECRs will be connected online with the central server of the NBR so that the VAT authority can detect whether any trader has kept the device switched off or is trying to manipulate it.
The vendor to be selected as third party may get duty-free benefits in importing the devices, officials said.
Some officials, however, expressed their doubts about the effectiveness of the plan saying that government’s revenue sharing with third party was not a good method.
They said that the experiences of engaging a third party the NBR got from the pre-shipment inspection system of the customs, which was later abandoned, was not good as there were huge allegations of misuse of the system.
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