A crisis seem to be looming in the horizon as Chairman, All Pakistan CNG Association (APCNGA) Sindh Zone, reacted angrily on the 6 percent income tax levied on CNG stations in the federal budget. Chairman APCNGA Junaid Makda has opposed levy and termed it contrary to the agreement made between the CBR and the association.
Chairman, All Pakistan CNG Association, Tariq Kandan has said that whatever raise has been envisaged, eventually it will be passed on to the consumer. Taking to Business Recorder, APCNGA Sindh Zone Junaid Makda quoted a recent discussion with a minister who said that six- percent income tax was imposed after consultation with CNG associations.
Clarifying the position, he said that no meeting was held with any recognised CNG association with the CBR Income tax wing nor any agreement was signed. He said instead of meeting the official APCNGA representatives, the CBR held a meeting on May 28,2007 attended by office bearers of the association of all the provinces and CBR representative Abdul Sattar Apora, Chief (Sale Tax), Syed Tanvir Ahmed, Additional Collector and Abdul Hameed Memon Secretary (ST L&P).
In that meeting issue of sales tax payment by CNG stations was discussed. It was agreed that sales tax payment by CNG station may be deducted at source ie at the stage of supply by SNGP and SSGC to facilitate the CNG stations and ensure proper payment of sales tax.
He said it was decided that gas companies would charge sales tax at 24 percent of the gas charges billed to the CNG stations. This 24 percent includes 15 percent normal sales tax presently being charged by gas companies and nine percent worked out on the basis of value addition by CNG stations.
These rates were sagged after considering various factors such as wastage, input adjustment on account of electricity and other inputs and the prevailing selling prices. He said that it was also agreed that the above arrangement would be enforced with effect from July 1,2007, through budgetary measures for the year 2007-08.
It was also agreed that after the enforcement of the arrangement, the CNG stations will be de-registered and they will not be required to file monthly sales tax return or to keep any record under the sales tax act, 1990. All CNG stations will submit their last sales return under the existing rules of July 15, 2001 for the tax period June 2007.
Replying to a question, he said that it might be true that Income Tax official meeting was held with some non-registered CNG association with TDO. However, later in statement to the press, he said that CBR's Income Tax wing negotiated with some people other than the representatives of APCNGA.
Central Chairman, All Pakistan CNG Association, Tariq Kandan has strongly raised objection and said that APCNGA is the only registered and licensed association under DTO, Ministry of commerce and that he himself is the Charmin of FPCCI standing committee on CNG. He briefed CBR official about agreement between APCNGA and CBR sales tax.
He said it was really disappointing that CBR income tax wing proposed 6 percent income tax. "We are already paying income tax in the normal course and therefore, levy of 6 percent income tax was meaningless and would ultimately deal a harsh blow to large number of CNG consumers.
During the meeting Tariq Kandan was assured that this view point would be taken into consideration and conveyed to the higher ups but this promise was not kept and now to our utter dismay 6 percent income tax has been levied which is impractical and unreasonable. He urged the Chairman, CBR to review the decision which appears to be double taxation.