FBR proposes hike in FED on cement and gas

The Federal Board of Revenue has drafted proposals to increase rate of federal excise duty (FED) on cement from Rs 700 to Rs 900 per ton and on natural gas from Rs 5.09 per mmbtu to Rs 10 per mmbtu in the budget having cumulative revenue impact of Rs 10-11 billion in 2010-11. Another revenue generation measure is to levy 16 percent federal excise duty on goods carriage by train from next fiscal year.
It was learnt here on Saturday that the FBR has drafted these proposals to be forwarded to the Ministry of Finance for consideration in the coming budget. In case the government agrees, the same would be made part of the Finance Bill 2010. In budget 2009-10, the rate of FED on cement was reduced from Rs 900 to Rs 700 per tons. This year it has been proposed to enhance the FED on it from Rs 700 to Rs 900 per tons to generate an additional amount of Rs 4-5 billion in 2010-11.
At present inland carriage of goods by air is liable to 16 percent federal excise duty. The proposal is to levy same amount of FED on carriage of goods by train to generate over and above Rs 2 billion during 2010-11. Sources said that in the Finance Bill 2010 the Federal Excise Act to be amended to increase the FED on natural gas from Rs 5.09 per mmbtu to Rs per mmbtu to implement the recommendations of the National Finance Commission (NFC).
Presently, rate of federal excise duty on natural gas is Rs 5.09 Million British Thermal Unit (mmbtu). This rate will be raised to Rs 10.0 per mmbtu to generate an additional amount of Rs 5-6 billion during 2010-11. The government had notified that natural gas price will be raised by Rs 10/mmbtu from July 1, 2010 with the increase in rate of federal excise duty (FED) as per the decision of the 7th National Finance Commission Award. This has been specified in the Presidential Order No 5 issued by the Ministry of Law, Justice and Parliamentary Affairs.
The amendments included in the revised Presidential Order No 5 also contain the National Finance Commission's recommendations for increase in rate of FED on natural gas to Rs 10 per mmbtu. The federal government may initiate necessary legislation accordingly," revised "Distribution of Revenue and Grant-in-Aid Order, 2010" added.