The Federal Board of Revenue (FBR) Thursday announced a significant increase in the value of Compressed Natural Gas (CNG) by 48 percent for the purpose of charging sales tax.
The decision, outlined in SRO 581 (I)/2024, aims to streamline the taxation structure and ensure equitable revenue collection from CNG consumers across different regions.
Under the new notification, the FBR has revised the rate per kilogram of CNG, setting it at Rs 200 for Region – I and Rs 200 for Region – II. This marks a substantial increase from the previous rates of Rs 140 and Rs 135 per kilogram, respectively.
The revised values serve as the basis for calculating sales tax on CNG supply to consumers, as mandated by the FBR. The notification provides clarity to CNG stations, gas transmission and distribution companies, and consumers regarding the applicable sales tax rates in different regions.
According to the FBR, Region – I encompasses Khyber Pakhtunkhwa, Balochistan, and the Potohar Region, which includes Rawalpindi, Islamabad, and Gujar Khan. Meanwhile, Region – II covers Sindh and Punjab, excluding the Potohar Region.
The decision to adjust the value of CNG for sales tax purposes reflects the FBR’s efforts to ensure fairness and consistency in revenue collection across regions. By aligning the taxation structure with market dynamics and regional considerations, the FBR aims to optimize revenue generation while facilitating the growth of the CNG sector.
The increase in the value of CNG may have implications for consumers, particularly in terms of pricing and affordability. As CNG plays a significant role in the transportation and energy sectors, any changes in its taxation can impact businesses and households reliant on this fuel source.
Industry stakeholders are likely to monitor the implementation of the revised sales tax rates closely, assessing its impact on consumer behavior and market dynamics. Additionally, businesses operating in the CNG sector may need to adjust their pricing strategies and operational models to accommodate the revised taxation framework.
The FBR’s decision underscores the importance of periodic reviews and adjustments to taxation policies to ensure their relevance and effectiveness in the evolving economic landscape. By maintaining a balance between revenue objectives and industry dynamics, the FBR aims to foster a conducive environment for sustainable economic growth and fiscal stability.
As stakeholders adapt to the new taxation regime, ongoing dialogue and engagement between the FBR, industry representatives, and consumer advocates will be essential to address any concerns and ensure the smooth implementation of the revised sales tax structure for CNG.
