ISLAMABAD: Federal Board of Revenue (FBR) has decided to switch real time collection of withholding tax from electricity consumers instead of power Distribution Companies (Discos) as discrepancies have been found in manual data, well informed sources told Business Recorder.
This idea was shared by Chairman FBR, Dr Muhammad Ashfaq Ahmed in a letter to Secretary Power Division Ali Raza Bhutta.
Power Division and FBR are already challenging each other on collection of taxes from electricity consumers through Discos. National Electric Power Regulatory Authority (Nepra) has also opposed collection of taxes through utilities.
Chairman FBR, in its letter has invited attention to the fact that it is focusing on real-time and API-based integration for data collection on withholding taxes by large withholding agents including Discos, acting as significant withholding agents crucial to overall tax collection.
FBR has claimed that discrepancies in manual data collection and un-reconciled tax deposits have resulted in additional demands on Discos and frequent litigations.
According to Chairman FBR, the tax collection agency would also like to switch to real-time transfer of withholding tax to its account on payment of consumer bill, rather than its deposits to Discos account and then transfer to FBR’s account.
FBR asked to resolve 4pc WHT issue of IPPs
He maintained in his letter that FBR would like an automatic credit of withholding tax to the federal treasury on payment of electricity bill by the consumer.
“Moreover, Discos’ consumer data is of immense importance for the documentation of economy given that the Discos consumer data is generally outdated and repeated measures for its updation have remained futile,” he continued.
“We propose that no bill be collected and considered paid unless the CNIC of the consumer is secured and updated on the bill collection software by the Bank/ authorised collecting agents/ Alternate Delivery Channel (ADC),” he further stated.
FBR, in its letter has requested Power Division to take necessary steps to have the proposals implemented at the earliest.
In this regard, Chairman FBR has nominated Abdul Wahid Uqaily, Director General (WHT) to liaise with the Power Division and Discos to carry forward the initiative.
The Economic Coordination Committee (ECC) of the Cabinet recently gave a decision in favour of Power Division on collection of billions of rupees General Sales Tax (GST) on subsidy being provided by the federal and provincial governments to their electricity consumers.
FBR sources resisted the proposal of Power Division for years but ultimately, Ministry of Law in its legal opinion supported the viewpoint of Power Division.
Copyright Business Recorder, 2021