ISLAMABAD: Federal Board of Revenue (FBR) has enhanced the consumer value of CNG by 28.34 percent for collection of sales tax from July 01, 2019.
The FBR issued SRO 690(I)/2019 to notify the consumer value of CNG for the purpose of charging of sales tax from CNG stations by gas transmission and distribution companies.
The FBR increased the consumer value of CNG to Rs69.57 per kilogram for Region-I, which included Khyber Pakhtunkhwa, Baluchsitan and Potohar Region (Rawalpindi, Islamabad, and Gujar Khan. The increase in consumer value is around 7.36 percent for this region as compared with the previous rate of Rs64.80 per kilogram.
However, the FBR increased the consumer value of CNG by 28.34 percent for Region – II to Rs74.04 per kilogram from Rs57.69 per kilogram.
The Region – II is included: Sindh and Punjab excluding Potohar Region.
Large Taxpayers Unit (LTU) Karachi two years back presented a draft amendment, which stated:
“Notification in exercise of powers under subsection (8) of section 3 for value of supply of CNG to CNG consumers as per prevailing market price in the same way as it is being issued in case of sale of petroleum product every month.
“Board [FBR] may kindly issue the notification in exercise of powers under subsection (8) of section 3 for value of supply of CNG to CNG consumers as per prevailing market price in the same way as it is being issued in case of sale of petroleum products to avoid huge loss of monthly sales tax revenue.”
The LTU Karachi said that the Gas Transmission and Distribution Company charges sales tax from CNG stations @ 17 percent of the value of supply to the CNG consumers as notified by the Board from time to time in terms of section 3(8) of the Sales Tax Act, 1990.
Board accordingly vide its SRO No. 236(I)/2014 dated 31-03-2014, had notified the value of supply to the CNG consumers as the total value added cost of CNG as notified by the OGRA.
The latest notification issued by OGRA is dated 31.08.2015 which fixed the maximum CNG price as follows:
| Region | Value Added Cost | GST
@ 17% | Maximum
CNG Sale Price |
| I | 64.80 | 11.02 | Rs. 75.82 |
| II | 57.69 | 9.81 | Rs. 67.50 |
On 21-12-2016, OGRA deregulated the CNG sector in Pakistan, and directed the CNG station operators/associations to fix the rates themselves, as per market demand.
This caused in an instant increase in the rates of CNG which jumped from Rs. 67.50 per kg in the Southern Region to Rs.79 overnight.
However, the Gas distribution companies are charging sales tax on the previously issued notification of OGRA dated 31-08-2015.
As a result, the CNG stations are collecting sales tax on maximum CNG sales price at Rs79 per kg from the end consumers where as the Government is getting sales tax from the Gas distribution companies on maximum retail price at Rs67.50, incurring a loss of sales tax revenue of Rs1.67 per kg.
This loss of sales tax revenue of Rs.1.67 per kg is being collected from end consumers and pocketed by CNG stations.
| CNG retail price per kg on which SSGC is collecting GST (Rs.) | GST @ 17%(Rs) | CNG prevailing market retail price (Rs) | GST @ 17% (Rs) | Loss in sales tax revenue per kg(Rs) |
| 67.50 | 9.81 | 79.00 | 11.48 | 1.67 |
The per month loss to the government revenue comes to be Rs75 million only in the case of SSGCL as the average monthly sale of Gas to the CNG stations by SSGCL is 50 million kgs of gas.
Similarly the loss in case of SNGPL which caters more than three times of CNG stations is fairly high.
