The government may extend exemption of duties and taxes on the import of compressed natural gas (CNG) machinery/equipment, compressors and allied apparatus for another one year from fiscal 2004-05.
Sources told Business Recorder here on Thursday that the time bound exemption of Customs duty and sales tax on the import of CNG machinery/compressors would automatically be withdrawn from July 1, 2004. However, Oil and Gas Regulatory Authority (Ogra) and Petroleum and Natural Resources Ministry have recommended to the government to amend SRO 38(I)/98 for extending exemption of duties and taxes on the import of CNG apparatus.
The budget makers have also favoured continuation of exemption for the CNG industry.
A senior CBR official said that CBR has no objection if the government wanted to continue concessions of duties and taxes to the CNG industry.
He admitted that use of CNG as a transport fuel not only lessens the burden on national exchequer by replacing costly imported liquid fuels, but also helps in improving the environment reducing air pollution.
In case, the ECC announce the decision, the CBR will use powers conferred by Section 19 of the Customs Act, 1969 (IV of 1969) and clause (a) of sub-section (2) of Section 13 of the Sales Tax Act, 1990 to extend exemption for another year, he added.
Presently, the exemption is available on CNG kits and cylinders up to June 30, 2004 as per the conditions laid down in the amended SRO 38(I)/98. Whereas, CNG machinery and compressors were liable to 5 percent Customs duty from November 1, 2002 to June 30, 2004 and these items would remain exempted from payment of sales tax.
When contacted, All Pakistan CNG Station Association President Tariq Kandaan said that Petroleum Ministry Director General Gas has recommended one-year extension in the duties and taxes exemption for the CNG industry to the Finance Ministry. The final decision would be taken by the Economic Co-ordination Committee (ECC) of the Cabinet.
Tariq said that the regulators of the industry, including Ogra and Petroleum Ministry have recommended to the Finance Ministry for extension in the SRO 38(I)/98.
The industry has demanded five years extension in the exemption of duties and taxes, while it is expected that the government would approve one-year further extension, he said.
The industry and the regulators convened several meetings on the issue of exemption and it is hoped that the government would sympathetically consider extension in exemption.
The industry is not having formal interaction with the tax authorities as it interacts with the regulators. However, budget proposals submitted to the CBR through chambers and commerce and industries have recommended extension.
Tariq said that the government was making all-out efforts to promote CNG culture by setting up new CNG stations to generate employment. The decision, if implemented, would popularise the use of consumer and environment-friendly motor vehicles fuel.
The CBR had recently included more Chinese, Italian and New Zealand made items like CNG compressors and related equipment in the list of exempted items through an amendment in the SRO 38(I)/98 issued here on Saturday.
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