ISLAMABAD: The Federal Board of Revenue (FBR) has announced to charge sales tax on supply of electricity to Azad Jammu & Kashmir (AJK).
The country’s top revenue authority has told the Ministry of Water and Power that the sales tax would continue to be charged on supply of electricity to AJK unless explicit amendment is made in the tax law.
However, the ministry may refer the matter to the Economic Co-ordination Committee (ECC) or Federal Cabinet for exemption from sales tax on supply of electricity to AJK.
The then president, on September 26, 2002, declared that electricity generated and supplied to AJK will be exempted from levy of sales tax. The FBR contended that in the absence of any formal orders/ notification/amendment in respect of the aforesaid decision, sales tax will continue to be charged as per law.
The field formations of FBR made out cases against non-levy of sales tax on supply of electricity to AJK. The appellate tribunal Inland Revenue (ATIR) Islamabad accepted the appeal of power distribution companies (DISCOs) regarding non-levy of sales tax which was subsequently set aside by the Islamabad High Court. Unless amendment is made in the law, sale tax will be charged as per law. However, the ministry may refer the matter to ECC/Federal Cabinet for an appropriate decision on the basis of cited agreement.
