The government is planning to double ''extra sales tax'' from 5 to 10 percent on all unregistered electricity and gas consumers having industrial or commercial connections in budget (2014-15) to make 100 percent increase in extra tax for undocumented businessmen. Sources told Business Recorder here on Friday that the ''extra sales tax'' @ 5 percent on electricity and gas connections was announced in last budget to force the unregistered persons to get registered with the sales tax department.
Contrary to this, five percent extra tax failed to achieve the desired results. The unregistered persons engaged in industrial and commercial activities were willing to pay additional sales tax instead of obtaining sales tax registration. Therefore, it has been proposed to double the additional burden of sales tax from 5 to 10 percent in budget (2014-15). To promote documentation and capture extra tax from persons outside the sales tax net, vide SRO 509(1)/2013 dated 12th June, 2013, extra sales tax @ 5 percent of the billed amount was imposed on all unregistered electricity and gas consumers having industrial or commercial connection and monthly bill exceeding Rs 15,000. A new chapter IVA was inserted in the Sales Tax Special Procedure Rules, 2007 vide SRO 510(1)/2013 dated 12th June, 2013, to prescribe the procedure for implementation of this measure. The RTOs/ LTUs where the electric power and natural gas distribution firms are registered were required to co-ordinate with them for proper and timely implementation.
When contacted, an expert opined that an additional burden of 5 percent sales tax was passed on to un-registered units in last budget. In budget (2013-14), the FBR has imposed 5 percent extra sales tax on un-registered commercial and industrial consumers of electricity/gas who are not active sales tax registered taxpayers. Thus, the power and natural gas distribution companies were charging 5 percent extra sales tax from unregistered commercial and industrial units. The FBR had provided data of Active Taxpayer List (ATL) to power and natural gas distribution companies to charge 5 percent extra sales tax from commercial and industrial consumers of electricity/gas who are not active sales tax registered taxpayers. The Board had also provided data of Active Taxpayer List to Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC) for charging 5 percent extra sales tax from commercial and industrial consumers at the time of generating bills. The power distribution companies were required to charge the extra levy from "unregistered" commercial and industrial gas consumers. In this way the power and natural gas distribution companies would know about unregistered as well as non-compliant units, which are not part of the ATL. Only registered but compliant units were not subjected to 5 percent additional sales tax in past. Whereas, unregistered and non-compliant commercial and industrial consumers were required to pay extra levy, sources said.