The All Pakistan CNG Association (APCNGA) has proposed the government to reduce general sales tax on CNG to 17 per cent, remove deduction of four per cent advance withholding tax from CNG stations and exempt the sector from gas infrastructure development cess (GIDC) from the next fiscal year.
An official source said that the APCNGA budget proposals demand bringing GST on CNG at par with other sectors as differential treatment to the sector was disallowed by the courts. As most of the gas to be used by the CNG sector is already priced higher than the local produced, the Sui companies also charge their high unaccounted gas losses in the price for LNG.
The association has also called for abolishing the four per cent advance withholding tax on CNG stations. Its argument is that the stations are already in the tax net. There is no justification for deducting advance tax which affects their profitability. The CNG stations operate on very slim margins and deduction of advance tax affects their financial viability.
The association has sought exemption from GIDC which is collected for expanding pipeline network of local gas. The CNG stations will be using imported LNG which is already exempted from GIDC.
The APCNGA is of the view that tax relief will allow keeping CNG price less than 35 per cent of petroleum price. It will also help revive the sector that has faced billions of rupees worth of loss during the last six years, they say.
