ISLAMABAD: The compressed natural gas (CNG) sector has been exempted from the registration requirement as Finance Minister Ishaq Dar approved a summary in this regard.
Though the notification for exemption has not yet issued, Federal Board of Revenue (FBR) has directed the gas utility companies not to charge additional 6 per cent taxes from the CNG stations until the issuance of SRO, the sources exposed. But FBR have authorised Sui Sothern Gas Company (SSGC) and the Sui Northern Gas Pipelines (SNGPL) to charge 26 per cent levy from the CNG stations on behalf of the government to halt fraudulent refunds, they added.
The move came just about 60 days after the approval of the budget by Parliament and is considered as counterproductive to steps declared in the budget to increase the tax base and decrease the size of the informal economy. In the budget, the government imposed one per cent additional sales tax on supplies of goods made to unregistered individuals by registered persons.
The FBR has also exempted the CNG sector from the condition of filing monthly sales tax return and directed them to file returns on quarterly basis.
All Pakistan CNG Association Chairman Ghayas Paracha said that filing returns on a quarterly basis means the FBR’s system treats the CNG sector as unregistered. He stated that the sector was willing to submit monthly sales tax returns.
The owners of CNG stations want to keep filing returns on nominal income tax rates, but the government has decided to keep the sector under a ‘special regime’. The CNG sector is presently paying a fixed income tax at a rate of 4 per cent of the total gas utility bills.
Paracha pointed out that after the reduction of CNG prices by the Supreme Court of Pakistan, the profits of the CNG sector had significantly been decreased and the sector was ready to pay taxes under the normal regime.
According to senior FBR officials, the Board wants to bring the sector into the normal regime, but had to keep its special sector status under unusual circumstances as the department has already exempted the sector from penalties.
They said hike in the CNG prices would enrage the Apex Court that had already taken the FBR to task for levying 26 per cent sales tax on the sector. Now it is also the responsibility of the Oil and Gas Regulatory Authority (Ogra) to keep check on the CNG stations and control the sale of CNG above the determined cost, the officials added.
The FBR officials said if the CNG sector comes under the normal category, it will increase the sales tax base. Total active sales tax registered persons in the country are below 100,000.