ISLAMABAD - The federal government has turned down a demand for the abolition of discriminatory income tax regime for public and private power producers.
The federal government has exempted independent power producers from income tax but no exemption is being provided to the public power producers, official sources told The Nation here Friday.
The provincial government of Khyber Pukhtunkhwa had demanded the federal government to give the same income tax exemption to the government energy entities which is available to the independent power producers (IPPs), and end discriminatory tax regime between the federal and provincial power departments, official said.
In a letter NO.
MIN:/E & P/KP/2016 to finance minister Ishaq Dar, the Khyber Pakhtunkhwa government had asked for the abolition of discriminatory rules for government and private power producers and federal and provincial power authorities, the official said.
According the letter, the 18th amendment had changed the locus standi of the regulatory, institutional and legislative frameworks for sharing of natural resources.
MIN:/E & P/KP/2016 to finance minister Ishaq Dar, the Khyber Pakhtunkhwa government had asked for the abolition of discriminatory rules for government and private power producers and federal and provincial power authorities, the official said.
According the letter, the 18th amendment had changed the locus standi of the regulatory, institutional and legislative frameworks for sharing of natural resources.
“You have always facilitated and come forth for the needs of the provinces.
We would like to put forth very important aspects for your kind consideration and inclusion in the Finance Bill 2016-17,” the letter said.
We would like to put forth very important aspects for your kind consideration and inclusion in the Finance Bill 2016-17,” the letter said.
The provincial government had demanded Amendment of Income Tax Ordinance 2001/amended in 2015 to bring public sector power plants at par with private sector IPPs.
It had also asked the government to provide the same tax exemption to Pakhtunkhwa Energy Development Organization (PEDO) that it (government) was giving to Water and Power Development Authority (WAPDA).
It had also asked the government to provide the same tax exemption to Pakhtunkhwa Energy Development Organization (PEDO) that it (government) was giving to Water and Power Development Authority (WAPDA).
Another demand for the amendment of Customs Act IV of 1969 to include crude oil and amendment of the federal excise act 2005 in the finance bill 2016-17 was also rejected by the central government.
Exemption from income tax, turnover rate tax and withholding tax on import, is available to power generation projects, the official said.
Any additional taxes and duties, over and above the tariff determined by NEPRA, are liable to be passed on to the power purchaser.
The total income tax exemptions are around Rs 95 billion.
Around 50 billion of the exemptions amount goes to independent power producers (IPPs).
Boards of education, universities and computer training institutes are also the beneficiaries of tax exemptions worth more than Rs10 billion.
Around 50 billion of the exemptions amount goes to independent power producers (IPPs).
Boards of education, universities and computer training institutes are also the beneficiaries of tax exemptions worth more than Rs10 billion.
The IPPs, working in power sector, have been exempted for life on their profits.
The section ‘industrial zones’ has been exempted from income tax for ten years but for IPPs it goes up to 27 years.
The section ‘industrial zones’ has been exempted from income tax for ten years but for IPPs it goes up to 27 years.
“If we take the case of just one private power producer, which is among the first IPPs of the country, it is earning Rs25-30 billion annually,” the official said without disclosing the name of the IPP.
Since the government has allowed tax free income, the IPPs are taking benefits from the exemption.
Since the government has allowed tax free income, the IPPs are taking benefits from the exemption.
If a private company is allowed to take benefit from a tax exemption then why a government entity is being denied the same, the official asked.
Similarly, the official said, the government is providing tax exemption to WAPDA which is not available to PEDO.
The federal government has turned down the demand and didn’t include it in the financial bill 2016-17, the official said.
Similarly, the official said, the government is providing tax exemption to WAPDA which is not available to PEDO.
The federal government has turned down the demand and didn’t include it in the financial bill 2016-17, the official said.
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