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May 29, 2002
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Wednesday
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Rabi-ul-Awwal 16,1423
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GST on domestic power soon
By Ahmad Fraz Khan
LAHORE, May 28: The federal government plans to impose 15 per cent general sales tax on domestic and agricultural electricity consumers from July 1 and expects to collect over Rs16 billion.
A source in the ministry of finance said on Tuesday that a formal suggestion to this effect has already been included in the budget proposals.
The ministry, he said, has also asked Wapda to furnish details of the expected income. The Wapda authorities, however, were sitting on the details of collections and hoping to get the imposition of the GST deferred when they meet President Musharraf on Friday to review Wapda’s performance.
The Wapda was opposing the imposition of GST on domestic and agricultural consumers as it thought that the government has been using it for tax collection which brought it bad name without any fiscal benefit, he said.
The domestic and agriculture consumers escaped the GST on Jan 1, 2001, when other electricity consumers came under the net. Then, domestic consumers were considered end users — as they could not pass on the effect to others like commercial and industrial users — and exempted from the GST. Since the government had decided to levy the GST on other agriculture inputs like fertilizers and pesticides, it deferred the GST on power to give some relief to farmers. Now, it has decided to net both untapped sectors.
As far as the expected collection was concerned, it could go above Rs14 billion. Wapda in its tariff revision petition has claimed that it would collect Rs66.723bn from domestic consumers and Rs14.8bn from agriculture consumers in the next fiscal year — a combined collection of Rs 81.51bn.
The authority has already asked Nepra for 24.87 per cent tariff increase. Even if the Nepra allows it 10 per cent increase, this collection would go up to Rs90bn. If around Rs20bn domestic collection of the KESC is included, the total earnings would go up to Rs110bn and 15 per GST would touch Rs16.5bn.
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