The National Board of Revenue (NBR) has clarified that a 15 per cent Value Added Tax on the distribution of natural gas to the consumers will remain unchanged.
The VAT policy wing of the board issued a clarification regarding this after it found widespread confusions on this.
Both Petrobangla and Bangladesh Energy Regulatory Commission (BERC) wanted to know about this before fixing the new gas price.
Despite the confusion, the commission has been taking preparations for fixing fresh tariff of gas for consumers excluding 15 per cent VAT at the distribution stage, said Md Tariq Hassan, second secretary of the VAT policy wing on Monday.
"We have issued the clarification to resolve the confusion," he said.
Signed by Mr Tariq, the clarification has been issued to all VAT offices across the country including BERC and Petrobangla.
"We have exempted 93.24 per cent Supplementary Duty (SD) to keep the upcoming increase in gas prices at the rational level," he said.
Gas price might be adjusted upward considering the tax exemptions, he added.
Costly liquefied natural gas (LNG) has been blended with the natural gas to supply to the consumers.
On October 3, the VAT wing of the NBR waived 93.24 per cent Supplementary Duty at the production stage, 15 per cent VAT at the trading (business) stage and 5.0 per cent advance trade VAT (ATV) on the product.
After issuance of the order, VAT exemption from the business stage makes the energy regulator confused, they said.
Earlier on September 26, customs wing also withdrew 5.0 per cent customs duty on the import of LNG with retrospective effect from September 18.
Officials said the order has been issued with retrospective effect as the Petrobangla started supply of imported LNG blended with local natural gas through national pipeline.
With the exemptions, consumers would get gas at affordable price, even after the upward adjustment by BERC, officials said.
However, the VAT wing estimated an annual loss of around Tk 110 billion in revenue collection from the gas sector owing to offering tax exemptions.
The gas sector was one of the largest revenue contributors to the national exchequer.
