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December 7, 2017

FBR to recover estimated Rs2bn from CNG stations


December 7, 2017

KARACHI: The Federal Board of Revenue (FBR) plans to recover an estimated outstanding amount of Rs2 billion from compressed natural gas (CNG) stations, which are paying lower sales tax after deregulation of prices a year ago, sources said on Wednesday.

“The government had deregulated the CNG prices on December 21, 2016 and allowed the concerned association of CNG stations to determine the price for consumers,” an official at the FBR informed The News.

“Earlier, the prices were regulated by Oil and Gas Regulatory Authority (OGRA) and the consumer price, determined by the regulator, was linked with the collection of sales tax from CNG stations.” The official added the sales tax was linked with OGRA rates on March 31, 2014 through SRO 236(I)/2014 and the last value of the sale price notified by the regulator was Rs67 per kilogramme for CNG stations, which remained applicable till the date of deregulation.

“However, following the deregulation, the sale price of natural gas has increased to Rs77 and the enhanced amount escaped from the implementation of sales tax,” the official said. The source added that the FBR would send draft amendment to the parliament for approval as the revenue body could not amend the law through statutory regulatory orders (SROs).

The CNG sector pays sales tax at 17 percent on the differential value of price received from gas utility and the sale price for consumers.

The functionary further said after the passage of the law from the parliament the FBR would issue notices to gas supply companies, including Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipeline Limited (SNGPL) to collect the outstanding amount from the SNG stations. Under the law the gas utilities are required to collect sales tax on value addition from the CNG stations through monthly bills and also maintain the record of supplies to the outlets. The sales tax on the CNG has been a thorny issue for the past many years. Before linking to OGRA-regulated sale price, the CNG stations were paying a higher rate of normal sales tax and an additional 9 percent during the years 2007 to 2014. The higher rate was set because there was a huge difference in the cost of purchase by the CNG stations and retail price.

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