July-March 2006-2007: Rs 12.8 billion paid as sales tax refund to power sector

The Central Board of Revenue (CBR) has paid Rs 12.8 billion as sales tax refund to power sector in July-March (2006-2007) against Rs 3.8 billion in the same period last fiscal, reflecting an increase of 237.7 percent. According to data issued on Thursday, the major recipient of sales tax refund during July-March 2006-2007 was power sector.
Resultantly, the net contribution from electricity has gone into negative. Within electricity, a major portion of refund payments of Rs 10.7 billion (83.3pc) has gone to Wapda, followed by KESC receiving Rs 2 billion. Other major refund beneficiaries were telecom sector (Rs 214.3 million), oil and gas sector (Rs 95.1million), sugar industry (Rs 54.6 million) and fertiliser industry by (Rs 54.1 million) during this period.
Despite 11.4 percent growth in gross sales tax collection from electricity during period under review, the net collection has been negative due to huge refund payments of Rs 12 billion, with major share of Rs 10.7 billion going to Wapda. It appears that the power sector is in need of serious re-structuring to improve its efficiency.
The overall refund/rebate payments during July-March 2006-07 was Rs 66.1 billion against Rs 65.4 billion during the corresponding period of last fiscal. There has been a decline in these payments with respect to customs by Rs 3.6 billion. But there has been an increase in refund payments of Rs 3 billion and Rs 1.4 billion for sales tax and direct taxes respectively.