Sales tax on LNG/RLNG rationalized

KARACHI: Federal government has proposed reduced rate of sales tax of 12 percent on sale of liquefied natural gas (LNG) and re-gasified liquid natural gas (RLNG) to gas transmission and distribution companies, while sale of the commodity to any other buyer will attract statutory rate of sales tax i.e. 17 percent.

The Finance Bill (Amendment) 2018 has amended Eighth Schedule to the Sales Tax Act, 1990, which describes sales tax exemptions. The amendment proposes 12 percent sales on LNG and RLNG if supplied to gas transmission and distribution companies including Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines (SNGPL). Earlier this reduced rate was applicable on across the board LNG/RLNG supplies.

An official said earlier all the LNG/RLNG were procured by the government through state owned companies and supplied through the network of SSGC and SNGPL. In the last Finance Act 2018, government had imposed 12 percent sales tax on all supplies of the fuel. Now that a number of merchant LNG terminals are coming up, LNG/RLNG buyers including the CNG sector, captive power plants and industrial units would pay statutory rate of sales tax.

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