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Hitch in GST levy on power

ISLAMABAD: Imposition of general sales tax GST on power consumption is likely to be delayed by a month or more as the government finds itself stuck in a constitutional logjam, sources in the Central Board of Revenue said.

The Constitution imposes a restraint on powers of the federal government to levy sales tax on consumption of electricity, which means that the tax will not be imposed until all provinces are willing to adopt it through legislation.

"There is a policy decision to impose general sales tax on electric power consumption from retrospective effect, but the tax has yet to be imposed," sources in the Central Board of Revenue said Wednesday.

Sources gave reference of the document which clearly suggests that factual position is contrary to the impression which the government is trying to depict ahead of the visit by an IMF delegation next week.

The Constitution specifically provides that tax on electricity consumption comes under provinces' domain.

"The levy will have to wait until the Central Board of Revenue can draft a uniform legislation for the provinces to adopt after it has been cleared by the ministry of law and justice in Islamabad," sources said.

CBR has been issued instructions to draft a law that could be forwarded to the provincial governments for simultaneous adoption.

Article 157 of the Constitution relates to the relationship between the federal and provincial governments in matters of electricity generation, its transmission and distribution and all ancillary matters.

Article 157(1) reads: "The Federal Government may in any province construct or cause to be constructed hydro electric or thermal power installations or grid stations for the generation of electricity and lay or cause to be laid inter-provincial transmission lines." Article 157(2) reads: "The government of a province may (a) to the extent electricity is supplied to that province from the national grid, require supply to be made in bulk for transmission and distribution within the province; (b) may levy tax on consumption of electricity within province. Fortuna