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Finance Ministry refuses to withdraw 23 percent advance income tax on electricity bills

ISLAMABAD (January 04 2003) : The Ministry of Finance (MoF) has refused to withdraw 23 percent advance income tax on electricity bills, despite Wapda's plea that this levy was badly hurting its industrial and commercial consumers, sources told Business Recorder here on Friday.

“It is the prerogative of the federal government to collect taxes through public sector agencies and it is not only Wapda, but Pakistan Telecommunication Limited (PTCL) is also acting accordingly, sources quoted MoF as clarifying through a letter recently.

Advance income tax on electricity bills was imposed by the government last year, which was kept secret to avoid public criticism, but the government appetite was not satisfied with this raise and rates were further enhance through Finance Ordinance, 2002.A few months back, Wapda wrote a letter to the federal government, saying that the utility was being criticised for sending inflated bills, which, in fact, was not responsible for such billing, asking the government to resolve the matter in the best interest of utility as well as consumers.

Wapda Chairman Zulfiqar Ali Khan also raised this issue publicly on several occasions, but the letter written by Wapda's Member Finance, Javed Nizam, a copy of which was sent to the Chief of Staff to the President, disturbed the Finance Ministry.

Javed said MoF was responsible for the hardship being faced by the domestic, commercial and industrial consumers, paying inflated taxes (23 percent advance income tax + 15 percent GST), adding that the utility was earning nothing but bad reputation.

Sources said that Finance Ministry was disturbed over Zulfiqar's public criticism on the issue of advance income tax and asked the utility's high-ups to launch campaign in favour of the Ministry so that the bad image could be eliminated.

Wapda consumers from all over the country, especially Faisalabad region, took out processions against inflated bills, notwithstanding the fact that the revenue so generated did not belong to the utility, Javed argued.

The utility was of the view that such state of affairs could not be sustained longer and steps should be initiated to rationalise the levies as was done in the case of gas companies, where collection of advance income tax through bills was withdrawn in the Finance Ordinance.

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