The Central Board of Revenue (CBR) has issued a new procedure for the payment of sales tax by the Karachi Electric Supply Company (KESC).
The CBR has amended the Special Procedure for Collection and Payment of Sales Tax on Electric Power through SRO. 1236(I)/2005 here on Thursday.
Previously, both the Wapda and KESC were operating under the same procedure for the purpose of payment of sales tax. Now, the CBR has introduced a new rule for discharging of sales tax liability by the KSEC. KESC would be separately operated under the new rule 37-A of the Special Procedure for Collection and Payment of Sales Tax on Electric Power.
According to the procedure, input tax adjustment would be admissible to the KESC in proportion to the quantum of electric power billed during the tax period. In case of the KESC, sales tax would be paid on the basis of supply of electric power billed to the consumers after adjustment of input tax in terms of sections 7 and 8 of the Sales Tax Act, 1990.
Under the amended rules, the KESC would file a monthly return under Section 26 of the Act and Chapter II of the Sales Tax Rules, 2005, and deposit the amount of sales tax payable for the tax period by the due date.
When contacted, a tax expert said that the KESC would not be able to claim input tax adjustment or refund on electricity, which is not billed because of theft/pilferage. Similarly, input tax adjustment would not be admissible in case of electricity not supplied to its consumers. The adjustment of input tax against the electricity lost through theft/pilferage would not be allowed as per the new amendment, he added.
However, input tax adjustment would be admissible to the KESC in proportion to the quantum of electric power billed during the tax period.
Following is the text of the notification issued on Thursday:
SRO.1236 (1)/2005.- "In exercise of the powers conferred by section 71 of the Sales Tax Act, 1990, read with clause (9) of section 2, sections 3, 3AA and 4, sub-section (2) of section 6, section 7A, clause (b) of sub-section (1) of section 8, clause (a) of sub-section (2) of section 13, sub-section (3) of section 22, section 23, sections 26AA and 34A, and the first and second provisos to section 45 thereof, the Federal Government is pleased to direct that the following further amendments shall be made in the Sales Tax Special Procedures Rules, 2005, namely:-
-- In the aforesaid Rules, in Chapter V.-
-- In rule 35,-
-- In sub-rule 2, in clause (b), for the brackets, words, letters, commas and full stop "(for example WAPDA, KESC, etc)", the comma word and letters, "like WAPDA" shall be substituted ;and
-- In sub-rule (3),
-- In the first proviso.
-- The word and letters "or KESC" shall be omitted; and
The word commas and letters "or, as the case may be, KESC" shall be omitted; and
-- In the second proviso, the word and letters "or KESC" shall be omitted;
-- In rule 36,
-- In sub-rule (1), the word and letters "and KESC" shall be omitted;
-- In sub-rule (2), the word and letters "and KESC" shall be omitted; and
-- In sub-rule (4), the word and letters "or KESC" shall be omitted; (c) inrule37,
-- In the heading, the word and letters "and KESC" shall be omitted;
-- In sub-rule (1), the word and letters "and KESC" shall be omitted; and
-- In sub-rule (2), the word and letters "and KESC", occurring twice, shall be omitted; and
AFTER RULE 37, AMENDED AS AFORESAID, THE FOLLOWING NEW RULE SHALL BE INSERTED, NAMELY:
"37-A Discharge of tax liability by KESC:(1) In case of the KESC, sales tax shall be paid on the basis of supply of electric power billed to the consumers after adjustment of input tax in terms of sections 7 and 8 of the Act and as provided under sub-rule (3).
"The KESC shall file a monthly return under section 26 of the Act and Chapter II of the Sales Tax Rules, 2005, and deposit the amount of sales tax payable for the tax period by the due date.
"Input tax adjustment shall be admissible to the KESC in proportion to the quantum of electric power billed during the tax period."
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