Govt charging different GST rates in gas stations in Punjab, other provinces

ISLAMABAD: The government has been charging General Sales Tax (GST) from CNG stations in Punjab and other three provinces with different rates, as it charges five percent in Punjab while 17 percent in other provinces.

The Senate sub-committee of the standing committee on Cabinet Secretariat that as convened by Senator Shahi Syed here Thursday termed it discriminatory and total injustice that has caused billions of rupees losses to the sector.

Interestingly, for the first time the government officials disclosed before the committee that the locally produced compressed natural gas (CNG) is much cheaper than the imported liquefied natural gas (LNG) and it was the reason the tax is collected with different ratio. As Punjab is fed with LNG, while other provinces with local CNG.

The Sui Northern Gas Pipeline Limited (SNGPL) officials informed the committee that sales tax is being collected from CNG stations owners following the order of Federal Board of Revenue (FBR) and Oil and Gas Regulatory Authority (OGRA). The committee was informed that CNG stations in Punjab are paying five percent GST while in other provinces’ CNG station are being charged 17 percent.

“Natural gas is cheaper while LNG is expensive and this is the reason that 5 percent GST is being levied on the gas stations in Punjab,” the officials said. 

Chairman of the sub-committee noted that double tax collection was being made from CNG sector that has caused billions of rupees loss to the sector. Chairman Oil and Gas Regulatory Authority (Ogra) also said that double taxation of CNG sector is illegal.

The committee directed the Ministry of Petroleum to hold meeting with All Pakistan CNG Association to address their problems. It was decided that the sub-committee would give its recommendation to the standing committee on the issue of double taxation. 

The representatives of CNG Association informed the committee that the CNG sector had faced a loss of Rs78 billion during three and a half years due to pricing issues. They appealed the committee to ensure third party audit of their claims regarding the extra tax collection from CNG sector.

The officials of Ogra gave briefing on CNG prices and sales tax. He said that for Zone-I the price of CNG is Rs35.17, while Ogra charges Rs13.24 per kilogram development cess, Rs6 per kg is electricity cost, operating cost and margin is Rs12, while GST is Rs11. They said that the Authority has notified Rs75.82 against per kg CNG gas for Zone-1. Regarding Zone-II it was informed that the price is Rs67.50 per kg.

They said there was no exercise of double tax collection from the CNG sector. The OGRA officials also rejected the report regarding 50 percent gas price hike from January 1, 2016 and said there was no advice of the federal government with Ogra for the said increase in gas prices.