Tax on electricity transmission likely to decrease

Source tax on electricity transmission is likely to be decreased in the upcoming budget as the Finance Division is going to propose the figure be reduced.

If the tax reduction is implemented, the Power Grid Company of Bangladesh (PGCB) will benefit from paying advance tax to the national exchequer in the fiscal year 2020-2021.

In 2018-2019, the PGCB deposited Tk39.50 crore with the government exchequer.

As per the 52AA subsection of 1984 ordinance, PGCB has to pay five percent and four percent source tax to the National Board of Revenue (NBR) for electricity transmission.

However, in the upcoming budget, the government is going to propose the amount be decreased to three percent and two percent.

Earlier, PGCB, the lone electricity transmission unit of the nation, submitted an application to the NBR to reduce the source tax as it has already paid more money in advance under the existing tax rate.

Due to high expenditure, the electricity wheeling company has to adjust the cost in the corporate tax and get approval of the Bangladesh Energy Regulatory Commission.

However, after reducing the tax, the PGCB might get a little relief from paying advance money to the NBR.

Golam Kibria, managing director of PGCB, said they have been urging the authorities concerned for zero percent source tax on transmission.

"Our expenses will decrease if the government approves it in the new fiscal year. Meanwhile, the electricity price charged to customers will also decrease," he said.