The Federal Board of Revenue (FBR) in Pakistan has declared a substantial 84% increase in the valuation of Compressed Natural Gas (CNG) for the purpose of sales tax collection.
This move, announced on Monday through the issuance of SRO 1465(I)/2021 dated November 15, 2021, marks a significant adjustment in the valuation rates for CNG in two distinct regions, impacting consumers and businesses alike.
The FBR has established fixed valuations for CNG based on regional categorization. Region – I encompasses areas in Khyber Pakhtunkhwa, Balochistan, and the Potohar Region, which includes Rawalpindi, Islamabad, and Gujar Khan. Similarly, Region – II comprises areas in Sindh and Punjab, excluding the Potohar Region.
The revision in CNG valuation rates comes as part of the FBR’s ongoing efforts to streamline the taxation system and ensure equitable contributions from different regions. The new valuation rates are intended for the collection of sales tax and are designed to reflect the evolving market dynamics and economic conditions.
The latest amendment, SRO 1465(I)/2021, supersedes the earlier notification, SRO 690(I)/2019, issued on June 29, 2019, by introducing updated valuations. The valuation rates for CNG have been increased significantly for both regions, as outlined below:
1. Region – I:
• Previous Valuation: Rs74.04 per kg
• Revised Valuation: Rs134.57 per kg
• Percentage Increase: 82%
2. Region – II:
• Previous Valuation: Rs69.57 per kg
• Revised Valuation: Rs128.11 per kg
• Percentage Increase: 84.45%
This sharp increase in CNG valuations aims to align the sales tax collection with the changing market dynamics and economic conditions. The FBR, through these adjustments, seeks to ensure a fair and consistent approach to tax collection, addressing potential gaps and enhancing transparency in the system.
It is noteworthy that these valuation changes will have an impact on both consumers and businesses in the respective regions. While the increase is substantial, it reflects the government’s commitment to adapt taxation policies to the evolving economic landscape, allowing for more effective revenue generation.
Stakeholders in the CNG industry, including consumers, distributors, and regulatory bodies, are urged to adapt to the revised valuations and adhere to the new sales tax rates. As the government continues to fine-tune its fiscal policies, these changes in CNG valuations contribute to a broader strategy aimed at achieving fiscal responsibility and economic stability in the country.
