ISLAMABAD, June 2: The government is considering giving sales tax exemption on electricity used in the manufacture of arms and ammunition for export purposes. An official told Dawn on Saturday that the issue was raised during the last meeting of Economic Coordination Committee (ECC) in which the prime minister directed the CBR to examine the issue in detail.

The Pakistan Ordnance Factories Board (POFB) had moved a summary seeking sales tax exemption on electricity used in the production of all arms and ammunition irrespective of their use locally or for export purposes.

The board manages its own power generation system for solely utilisation by indigenous defence industries for the production of arms and ammunition.

According to the minutes of the ECC, POFs deposited Rs414 million sales tax and income tax during the current year.

The ECC was informed that the collectorate of sales tax, Rawalpindi, had raised a demand on POFs for payment of sales tax at the rate of 15pc GST on the electric power generated by it in terms of provision contained in section 13 of the sales tax act 1990.

A total amount of Rs593 million would be required for the period from September 1999 to February 2007 for payment of sales tax.