The Central Board of Revenue (CBR) may suffer a loss of around Rs 1 billion due to zero-rated sales tax on electricity being consumed in the manufacture of textile products, leather items, carpets, sports goods and surgical instruments.
Sources told Business Recorder here on Thursday, that zero-rated sales tax would have revenue implications of approximately Rs 1 billion. In 2004-05, the general sales tax (GST) collection from the electricity amounted to Rs 15.637 billion against Rs 13.744 billion collected in 2003-04.
On the other hand, this facility may decrease the GST collection in 2005-06. A separate study is being conducted by the tax authorities to ascertain the actual loss due to zero-rated sales tax on electricity being consumed by these industrial units.
Recently, Water and Power Development Authority (Wapda) has asked the Sales Tax Department to give complete information about "electricity reference numbers" of the industrial units for claiming zero-rated sales tax on electricity being consumed for the manufacture of textile products, leather items, carpets, sports goods and surgical instruments.
The CBR had issued SRO. 792(I)/2005 notifying the names of 345 industrial units, which are entitled to zero-rated sales tax on power consumption in the manufacture of goods, for five export-oriented sectors. But, Wapda authorities opined that zero-rated facility could not be extended to these 345 units until and unless proper electricity reference is available with the authority.
On the recommendation of Wapda, the CBR is revising the SRO to ensure that Wapda/KESC, etc, should not find it difficult to verify data of meter numbers of the zero-rated units as specified in the new SRO.
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