ISLAMABAD (January 12 2003) : The Central Board of Revenue (CBR) has clarified that the tax concessions given to the investors for setting up power projects in Pakistan have not been withdrawn under recent amendment in the Income Tax Ordinance 2001.
The oil-fired power units, exempted from income tax prior to Power Generation Policy 2002, would continue to remain exempt as per earlier government commitments.
The second proviso was added to clause (132) of Part-I of the Second Schedule to the Income Tax Ordinance 2001 through SRO 940(I)/2002 of December 19, 2002 whereby exemption from income tax to oil-fired power plants stands withdrawn.
Queries have been raised by the owners of power plants as to whether the notification was also applicable to the oil-fired plants set up prior to October 22, 2002 and time-bound exemption available by virtue of mutual agreements between the government and independent power producers (IPPs) was also affected by the notification.
The CBR was of the view that the intention of the Power Generation Policy 2002 could not possibly be to withdraw exemption from the existing power plants of this category.
The CBR pointed out that government is committed to honour the agreements entered into for setting up power projects. Concessions/facilities provided earlier have not been withdrawn. Therefore, the oil-fired power plants that were exempt from income tax prior to Power Generation Policy 2002 would continue to remain exempt from income tax as per earlier commitments.
The policy decision taken on October 22, 2002 is, therefore, prospective in nature and would be applicable to the oil-fired power plants set up on or after October 22, 2002.
To make the position absolutely clear and give effect to the intent of the policy decision necessary amendment has also been made in the Income Tax Ordinance 2001 through fresh SRO, so as to remove any tinge of confusion or ambiguity in the minds of existing oil-fired power plant owners, the CBR added.