FBR showing complacency towards Rs3bn receivable
MUHAMMAD ALI
KARACHI: The Federal Board of Revenue (FBR) has appeared feckless to recover around Rs3 billion revenue from CNG sector accumulated since its deregulation by Oil and Gas Regulatory Authority (Ogra) in December 2016, it is learnt.
According to sources, the Gas Transmission and Distribution Company (GTDC) charges sales tax from CNG sector at the rate of 17 per cent of the value of supply to its consumers as notified y the board in terms f section 3(8) of the Sales Tax Act 1990.
Later, the board has notified vide its SRO 236(I)/2014 the value of supply to the CNG consumers as the total value added cost of CNG as notified by the OGRA.
Sources said that last notification to fix the maximum price of CNG (Rs64.8 per kg in region I and Rs. 57.69 per kg in region II) was issued by OGRA on August 31, 2015 and after 16 months of its issuance, the regulatory authority had deregulated the CNG sector and allowed the CNG station operators to fix rates as per market demand.
Resultantly, the rates of CNG have jumped from Rs.67.5 kg in the southern region to Rs. 79 per kg overnight.
However, the gas distribution companies are compelled to charge sales tax on the previously issued notification of OGRA dated August 31, 2015. As a result, the CNG stations are collecting sales tax on maximum CNG sales price at Rs. 79 per kg from the end consumers where as the government is getting sales tax from the gas distribution companies on maximum retail price at Rs. 67.50, incurring a loss of sales tax revenue of Rs. 1.67 per kg, sources said.
Furthermore sources said this loss of sales tax revenue of Rs.1.67 per kg was being collected from end consumers and pocketed by CNG stations; adding that the monthly loss to the government revenue came to be Rs. 75 million only in the case of SSGCL as the average monthly sale of gas to the CNG stations by SSGCL was Rs. 50 million per kg.
The annual revenue loss is accumulated to Rs. 2 billion and the board during last 18 months remains unable to recover Rs. 3 billion charged by CNG sector from consumers.
Replying to a question, sources urged the FBR to issue notification under subsection (8) of section 3 of the Sales Tax Act 1990 for value of supply of CNG to CNG consumers as per prevailing market price in the same way as it was being issued in case of sale of petroleum products to avoid further monthly sales tax revenue loss.
