The Federal Board of Revenue (FBR) on Tuesday notified the imposition of five percent General Sales Tax (GST) on LNG import for CNG and fertilizer sectors.
The Economic Coordination Committee (ECC) of the Cabinet in October 2014 had decided to impose 5pc GST on LNG import in any case but exempted it from gas infrastructure development cess (GIDC). Therefore, following the decision, the FBR notified the imposition of five percent GST on LNG import for CNG and fertilizer sectors.
The Ministry of Petroleum and Natural Resources had submitted a proposal in the ECC for exempting LNG import from GIDC and GST in order to reduce its prices. However, the Federal Board of Revenue (FBR) opposed the import of zero-rated LNG, as it would result in revenue loss. The government after detail deliberations imposed five percent GST on the import of LNG as against the standard rate of 17 percent.  The decision is taken with a view to facilitate the general public and encourage investment in the sector.
The FBR has also attached four conditions for levying five percent GST on fertilizer produced by using imported LNG. The conditions included a gas supply certificate, containing bifurcation of supply of imported LNG and domestic natural gas, from SNGPL in consonance with allocation by the Ministry of Petroleum and Natural Resources shall be produced by the fertilizer manufacturer to the Commissioner Inland Revenue having jurisdiction on monthly basis. (II) The standard rate of sales tax shall be charged on supply of fertilizer if manufactured from domestic natural gas as transmitted by SNGPL on the rates notified by OGRA for the fertilizer industry. (III) If, during a tax period, a manufacturer purchases imported LNG as well as domestic natural gas, the total quantity of fertilizer produced in the said tax period shall be apportioned accordingly for the purpose of levy and collection of sales tax. (IV) In case different retail prices are fixed for the fertilizer manufactured from imported LNG and that from domestic natural gas, the provisions of clause (27) of section 2 of the Sales Tax Act, 1990, regarding payment of sales tax on highest of such retail prices shall be followed.