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ST (Amend) Ord: FBR spurns CNG price hike concerns

ST (Amend) Ord: FBR spurns CNG price hike concerns

ISLAMABAD: The Federal Board of Revenue (FBR) clarified that recently issued Presidential Sales Tax (Amendment) Ordinance 2014 will not result in an increase in the prices of CNG as standard rate of 17 percent General Sales Tax (GST) is applicable on CNG stations.

It is to be noted that on March 23, the government promulgated Sales Tax Amendment Ordinance, 2014 to charge 17 percent sales tax, covering net ‘value addition’ tax on Compressed Natural Gas (CNG) stations on the basis of sale price fixed by Oil and Gas Regulatory Authority (Ogra). Therefore, the CNG association said this move would increase the CNG prices, as government imposed additional 17 percent tax on it.

However, The FBR dispelled the impression of any increase in CNG prices. “No, CNG prices will not increase, as FBR does not impose any new tax on it”, said Shahid Hussain Asad, Member Inland Revenue and Official spokesperson for FBR. He said that the FBR would not get any additional revenue as a result of the promulgation of the Sales Tax Amendment Ordinance, 2014.

Meanwhile, the FBR has issued public notice in this regard. The public notice reads as, “the effect of this Ordinance (Presidential) is that sales tax at the standard rate of 17pc shall be charged and collected from CNG stations through their gas bills by the gas distribution companies. It is clarified that no new tax has been imposed, but only the mode of collection has been changed under this Ordinance, to ensure compliance and facilitate administration of the tax”.

Similarly, the notice stated, “It is therefore, specifically clarified that the rate and amount of sales tax payable on CNG remains the same as already notified by OGRA through its notification dated December 17, 2013. Thus, there will be no change in the consumer price of CNG or the amount of sales tax collected from the consumers. The price of CNG shall remain the same as already notified by OGRA”.

It is to be mentioned here that Oil and Gas Regulatory Authority (Ogra) on December 17, 2013 had issued notification of new prices of CNG after the judgment of Supreme Court of Pakistan. The apex court had ordered suspension of additional 9pc GST on CNG and impose standard rate of 17pc on it.

According to Ogra’s notification pertaining to new prices of cheap fuel (CNG) for above three million vehicles, new price of CNG for Region-I is Rs74.25/kg while Rs66.14/kg for Region-II. New prices have been notified as per the judgment of Supreme Court. The OGRA decreased the prices up to Rs1.23 per kg.

The FBR has only ensured that the net value addition should not increase without causing revenue loss to the national exchequer.