Now the revenue board is bent on collecting value-added tax from three funds developed with VAT proceeds from subscriber bills for use in the country's energy security.
VAT at a rate of 15 per cent would be applicable to Gas Development Fund (GDF), Energy Security Fund (ESF) and Energy Research Fund (ERF), says a letter from the board's VAT wing seeking the accumulated tax collected from subscribers and used for building up the three funds instead of depositing with the exchequer.
Currently, Petrobangla collects VAT with the gas tariffs which go for constituting those funds, revenue officials pointed out.
However, the VAT is not deposited with the public exchequer as the energy regulator claims the funds are VAT-exempted as it is a contribution of consumers to those funds.
In a review, the National Board of Revenue (NBR) found the consumers having paid VAT with the gas tariffs.
"As the NBR has not waived VAT on those funds, the Petrobangla will have to deposit it with the public exchequer," said one official.
Recently, the NBR wrote to the Bangladesh Energy Regulatory Commission (BERC) chairman to re-fix the VAT on those funds and ensure its deposit to the exchequer.
The Large Taxpayers Unit (LTU) under the VAT wing in a meeting last Tuesday requested the state-owned Petrobangla to pay off the VAT.
A senior VAT official said the NBR is expected to receive around Tk 1.0 billion worth of VAT from the funds annually.
"The funds are a part of the gas tariffs and the government expects to receive Tk 150 million in VAT per month as per existing gas tariffs," the official said.
The NBR sent letters twice to the BERC clarifying the issue on applicability of VAT to the funds, the VAT official added.
Earlier, the VAT authority detected the gas tariffs at consumer level, fixed on June, 6, 2022, faulty for not including proper amount of VAT as per law.
The LTU has identified the flaws in VAT calculation by BERC on that gas tariffs levied on power, captive power, fertilizer, large, medium and small, cottage and other industries, tea industry, commercial (hotel and restaurant), compressed natural gas (CNG) and household usages.
However, the NBR recently claimed Tk 750 million from the Petrobangla as outstanding amount of VAT on gas tariffs.
With effect from February 1, 2023, the government has hiked gas prices for power, industries, and commercial (hotel and restaurant) sectors up to 179 per cent.
However, gas prices for residential, fertiliser, and tea production were not increased.
A senior VAT official said they were yet to analyze the new gas tariffs to find whether the energy ministry resolved the issue.
He said determination of VAT rates for gas or any other products or services is a sole authority of the NBR.
The BERC also refrained from calculation of VAT from those three funds---GDF, ESF and ERF.
Commission Director (Gas) Mohammad Ali Biswas said the BERC was not in favour of imposing the VAT on GDS, ESF and ERF as it is a contribution of the consumers to development of and research on country's energy security.
However, the revenue board differed on this point and replied accordingly, he added.
"The commission has yet to take any decision on this as tenure of the current commission is about to expire," he added.
Officials said the NBR has the sole authority to decide on VAT-and Supplementary Duty (SD) - related matters, not the BERC.
Already, LTU is struggling to realize Tk 225.84 billion undisputed arrears from Petrobangla that was settled in 2017-18.
Currently, there is no scope of book adjustment as the finance division has introduced ibas++ for accounting purpose.
In the last FY 2021-22, the NBR collected Tk 32.39 billion in VAT from five major gas-marketing companies: Petrobangla, Rupantarita Prakritik Gas Co Ltd, BAPEX, Sylhet Gas Field Ltd, and Bangladesh Gas Field Ltd.
