LAHORE - The Water and Power Development Authority (Wapda) has finalised a new formula for General Sales Tax (GST) collection on electricity bills to be collected by July this year, which has been sent to the Ministry for the implementation, official sources told The Nation here Wednesday. According to the new mechanism, Discos would prepare GST payment and electricity duty invoices by 15th of every month. The Pakistan Electric Power company (PEPCO), working under the chairman WAPDA, has prepare a model for sale and purchase of electricity with modifications under the guidance of Finance Ministry," sources said. The amount of Sales Tax from Wapda will be collected on cash basis. Presently, government had been giving subsidy to pay sales tax on total amount collected from the consumers. Sources said that Wapda and CBR were locked horns from day one over collection of GST on electricity bills and even its former chairman Zulfiqar Ali Khan had pointed out several times that GST was one of the factors instrumental in inflating the bills. Now the government has finalised the standard operating procedure, time lines and proposed responsibilities of Central Power Purchase Agency (CPPA) which would be difficult to decide. Sources said that KESC had demanded special treatment, and wanted to pay sales tax on the amount collected from the consumers. The corporation wanted privileges, like Wapda, to pay sales tax on the collected amount of bills. It is a global practice that the power distribution companies pay sales tax on the bills issued to their consumers. There is no concept of special dispensation to the power companies anywhere in the world, officials added. They said that the government had made it mandatory that from July 1, 2006, both Karachi Electric Supply Corporation (KESC) and Wapda to pay sales tax on total amount billed to consumers. In this regard, Federal Board of Revenue (FBR) had amended the relevant rules to give equal treatment to both power entities, for payment of sales tax. They said that the government had decided last year that GST collection from Wapda would also be on accrual or billing basis from July 1, 2006, but the plan remained unimplemented because of slow progress on corporatisation issue. Sources said that the receipts of subsidies and assistance from GoP during 2006-07, as per Nepra determined tariff, were short by Rs 50 billion, which was exceeded to Rs. 54 billions whereas the tariff subsidy (Tariff Gap) of Rs: 18 Billion was still outstanding with the government, which was being endured by the utility. They said that Wapda had to take short-term loans against these GoP payables to clear IPPs and fuel suppliers bills," said Wapda Chairman in a recent presentation to the Finance Secretary.