GST paid on uncollected power bills: Pepco claims Rs29.557bn adjustment by FBR

ZAHEER ABBASI & SOHAIL SARFRAZ

ISLAMABAD: An amount of Rs 29.557 billion was paid up to June 30, 2011, by Pakistan Electric Power Company (Pepco) to the Federal Board of Revenue (FBR), on account of general sales tax (GST) on uncollected electricity bills.

Sources told Business Recorder that Pepco has taken up the matter with the Federal Board of Revenue (FBR), arguing that it be allowed to pay GST on only those electricity bills that have been cleared by the customers, instead of the billed amount, which includes bills which have not been cleared by customers. This issue was raised during the meetings of the Cabinet Committee on Energy, constituted by the Prime Minister.

On the recommendations of the Energy Committee, the government decided that GST on uncollected electricity bills would be adjusted against the amount due to be paid by Pepco on recently issued bills, or future billing.

Sources said that Pepco is seriously concerned, as FBR has not yet issued notification in the light of the decision taken by the Cabinet Committee on Energy for adjustment of GST paid on uncollected bills against future billing.

The FBR was collecting GST on 100 percent billing, whereas the recovery of Pepco is around 70 percent. Sources said that Cabinet Committee on Circular Debt has, reportedly, estimated that around Rs 10 billion GST collected is attributable to un-collected power bills. This issue can only be resolved if the FBR issues the necessary notification which, to date, it has not done.

When contacted, a tax expert said that commercial and industrial consumers of electricity are paying withholding tax and general sales tax (GST) on power bills while domestic consumers of electricity pay only sales tax on electricity bills. Sales tax collections from electricity bills showed an increase of 38.8 percent during 2010-11 as compared to year before.

The withholding tax collected from electricity stood at Rs 14.313 billion during 2010-11 against Rs 15.471 billion in 2009-10, reflecting a decrease of 17.5 percent. Within net domestic sales tax collection, major contribution has come from POL products, telecom, services, natural gas, electricity and cigarettes etc during this period.

The sales tax collection on electricity during 2010-11 improved by 38.8 percent despite increase of 39.2 percent higher growth in the refund payments. The FBR data further showed that the sales tax collection from electricity amounted to Rs 8.190 billion during 2010-11 against Rs 5.900 billion in 2009-10, reflecting an increase of 2.2 percent.