Govt to introduce new GST collection system for electricity bills
Wednesday April 22, 2020
Islamabad: The government is looking to introduce a tax collection system wherein the general sales tax (GST) will be charged on the actual amount of consumer dues collected instead of billed by the power distribution companies, a news source reported. Read: Provinces to launch ‘single tax return’ facility for generating provincial GST on services As per going practice, the federal executive provides subsidy to those consumers who utilise less than or up to 300 units on a monthly basis. To this effect, the Federal Board of Revenue (FBR) charges sales tax from the distribution companies against the subsidised amount. However, the Power Division has recommended that the sales tax should be charged only on the amount received from the consumers. This will mean that no GST will be collected on the subsidy provided by the government or the amount not collected by the power distribution companies on account of theft and technical losses. Read: FBR to shift from GST to VAT collection model The FBR charges tax on the full amount of bill, while the recovery is actually around 90%. This means that FBR has to refund the remaining 10% to the companies which have accumulated up to PKR 330 billion. Now the authorities plan on changing this practice through relevant amendments, which are expected to be introduced in the upcoming finance bill.
