The Federal Board of Revenue (FBR) has issued SRO 587(I)/2022 dated May 10, 2022, announcing an increase in the valuation of Compressed Natural Gas (CNG) for the purpose of charging sales tax on sales to consumers.
This adjustment in valuation reflects the FBR’s effort to align the sales tax calculations with current market conditions.
According to the newly issued SRO, the FBR has raised the value of CNG to Rs140 for Region – I, compared to the previous valuation of Rs134.57. Similarly, for Region – II, which includes Sindh and Punjab (excluding Potohar Region), the value of CNG has been increased to Rs135 from the earlier valuation of Rs128.11.
This revision follows the issuance of SRO 39(I)/2022 dated January 08, 2022, where the FBR initially notified the values of CNG, effective from January 01, 2022. The purpose of determining these values is to facilitate the calculation of sales tax on CNG sales to consumers at CNG stations operated by gas transmission and distribution companies.
The previous valuation was outlined in suppression of the FBR’s notification No. SRO 690(I)/2019 dated June 29, 2019, further highlighting the regulatory adjustments made over time.
It’s important to note that the valuation of CNG is region-specific, with Region-I encompassing areas of Khyber Pakhtunkhwa, Baluchistan, and the Potohar Region (including Rawalpindi, Islamabad, and Gujar Khan). Region-II comprises Sindh and Punjab, excluding the Potohar Region.
The decision to revise the valuation of CNG is a dynamic response to changes in market conditions, cost structures, and economic factors affecting the energy sector. By periodically reassessing and adjusting these valuations, the FBR aims to maintain a fair and reflective system for the calculation of sales tax on CNG transactions.
The increase in CNG valuation is expected to have implications for both consumers and businesses operating in the CNG sector. While it may result in a marginal increase in the cost of CNG for end-users, it also ensures that the sales tax accurately captures the prevailing economic realities.
As the FBR continues to fine-tune its taxation policies, stakeholders in the energy sector will closely monitor these developments, assessing their impact on operational costs and pricing structures. The periodic adjustments in CNG valuations serve as a mechanism to uphold fiscal responsibility and ensure the sustainability of revenue streams while considering the broader economic landscape.
The FBR’s commitment to transparent and responsive tax policies is evident in these adjustments, providing clarity to both businesses and consumers in the CNG sector. The revised valuations reflect the FBR’s dedication to aligning taxation practices with the evolving economic dynamics of the country.