The key tax related issues settled between the All Pakistan CNG Association (APCNGA) and Federal Board of Revenue (FBR) have not been implemented despite passage of almost one year. Industry sources told Business Recorder here on Monday that the FBR and the association had resolved the key issues of double taxation under the presumptive tax regime and withholding taxes.
Similarly, the FBR had agreed to a proposal of the association to constitute a 'CNG Tax Board' to resolve tax related issues of the industry. Other tax related issues were also resolved in Karachi on January 8, 2010 at FBR Camp Office, Main Income Tax House, Karachi.
However, the FBR has yet to implement the decisions of the meeting and now the association has again approached the FBR through the Karachi Chamber of Commerce and Industry. So far, the FBR has not constituted the 'CNG Tax Board' as agreed by the Board. The issue is to implement the decisions as agreed between the FBR and the concerned association in January 2010.
According to association, the CNG falls under Presumptive Tax Regime since July 2007. Under section 234A of the Income Tax Ordinance 2001 there should be a final tax on the income of CNG station arising from the consumption of the gas. Presently under PTR the CNG station pay 4 percent direct tax on the gas bill deducted at source by the gas companies being full and final tax. The association stated that the CNG sector is being charged withholding tax at the rate of 10 percent in the KESC bills, telephone bills and other tax deductions on supplies. These deductions are source of double taxation. In order to avoid double taxation, the FBR had issued directives to the respective Commissioners that the following resolution may immediately be passed: It was discussed during the meeting that sub-section (4) of section 234(A) of the Ordinance 2001 wherein no adjustment of tax withheld under any other head is provided, may be considered sympathetically to avoid double taxation and hardship to the taxpayer.
It was also decided that the tax exemption certificate can be provided for supplies of CNG to customers who deduct tax under section 153 of the Ordinance 2001 to avoid double taxation as per the rules and policies of FBR.
The association also pointed out that the CNG stations are being charged general sales tax (GST) 25 percent arising from the consumption of the gas being full and final General Sales Tax deducted at source by the gas companies. The association stated that the CNG sector is again being charged as double taxation by deduction of GST on utility bills, like KESC, telephone, and also on purchases of various goods and services, like lubricants, diesel, spare parts, chemicals etc.
In order to avoid double taxation with respect to GST, it was agreed to allow the CNG stations owners to claim refund of GST through E-Filing on every quarterly basis.
The association recommended the formation of a 'CNG Tax Board' in which detailed proposals shall be formulated. The FBR agreed for the formation of a 'CNG Tax Board' under the Chairmanship of an FBR member and other representatives of FBR. This Board will play a role of bridge between the FBR and the association to discuss and resolve tax related matters. Moreover, the association using the platform of the 'CNG Tax Board' shall present detailed budgetary proposal related to the tax issues of the CNG sector which shall be taken into due consideration by the FBR in the budget.
It was mutually resolved that the association will provide their full support and efforts to FBR regarding registration in income tax amid sales tax, e-filing of sales tax returns on quarterly basis, proper submission of income tax returns on annual basis as required by the law. In consultation of FBR, the association will also try to educate its members regarding proper fulfilment of procedural requirements and create awareness to broaden the tax base.
Those members, who are non-filers, FBR shall provide list to the association for necessary assistance. Further, all the association's members will also be asked to file their statements and assist the FBR in maintaining of withholding of such taxes. Any independent CNG Stations having Tyre Shops, Mini Marts, or any other kind of business activity on their premises shall also take that income into consideration while submitting annual tax returns, association added.
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