Dhaka: The National Board of Revenue (NBR) has decided to expedite its drive to realize the VAT at source against the regular supply service from all government organisations including ministries, departments and divisions.

The NBR has started to send letters to the relative ministries, departments and divisions in this regard to realise the VAT and deposit it to the NBR. A highly placed source in the NBR confirmed the matter.

Regular supply service means any work of a government entity that is done by the contractors through tenders. That means any sort of renovation, repairing, construction, maintenance works that will be done by the outside (or private) individual or organisation after floating tender will be under this service.

According to VAT rules 1991 (18 Uma) public, semi-government, autonomous organization, NGOs, banks, insurance companies, financial institutions, limited companies, educational institutions and organizations that have turnover more than Tk 1 crore has been given the responsibility to realize the VAT at source. These organizations will have to deposit the realized VAT through VAT bill to the government exchequer.

A senior official in NBR said that under the annual development programme (ADP) various government offices and organizations procure service or items. For that they float tender. Against this procurement the respective office deduct the VAT at source from the contractors or the suppliers. This system is applicable for public, semi-government or autonomous bodies.

The budget for the 2015-16 fiscal has increased the rate of VAT at source on the regular supply service to 5% from 4% and it has been implemented from 4 June.

The NBR chairman Nojibur Rahman in his letter that was sent to all government organisations including ministries, departments and divisions stated the increased rate of the VAT on the supply service.  It also stated that supply service is on the major sectors where VAT at source is applicable.

According to the NBR estimate it would be able to collect additional Tk 215 crore due to the increased VAT rate.

The letter requested the secretaries to give directive to their subordinate ministries, divisions, departments and organisation heads in this regard.

The NBR senior official said that the letters are being sent to different offices to inform them that the rate of the VAT is increased and to accelerate the realisation of the VAT from the contractors or suppliers at source.

The NBR is also serious to fulfil its huge target this year, and for that it is pinpointing all sectors to increase its revenue collection, he said.

In the budget for the 2015-16 fiscal, the NBR has been given a target of Tk 176,370 crore, which is 30.62% higher than the previous year. Last year it was Tk 149,720 crore, but later it was reduced to Tk 135,028 crore in the revised budget.

This year, Tk 64,971 crore will come from income tax, Tk 64,262 crore will come from VAT while Tk 18,752 crore will be collected from import duty.