Power Division Opposes GST Imposition on AJK Power Supply
The government of AJK already levies general sales tax through its tax department.
Saad khan 
Islamabad: The Power Division in Islamabad is strongly opposing the Federal Board of Revenue's decision to impose GST on electricity supplied to Azad Jammu and Kashmir (AJK). They argue that this contradicts a crucial 2003 agreement exempting AJK from such taxes. The Power Division has raised this issue with the Economic Coordination Committee (ECC), advocating for GST exemption to uphold AJK's economic stability and respect its tax autonomy.
The disagreement centers on conflicting interpretations of the 2003 agreement, which was signed by the Ministry of Water and Power, WAPDA, and the AJ&K government. This agreement explicitly mandates that the Federal government ensures GST is not applied to electricity supplied to AJK, recognizing the region's autonomous tax policies. Despite this, the FBR persists in enforcing GST, potentially straining financial resources for distribution companies (DISCOs) and exacerbating the power sector's circular debt issues.
The Power Division contends that electricity supply to AJK has historically been treated as zero-rated under the Sales Tax Act, aligning with the government's commitment to provide electricity to AJK without additional taxation. To address the ongoing dispute, the Power Division has proposed legislative amendments to the Sales Tax Act, suggesting that electricity supplied to AJK by DISCOs should be taxed at a zero percent rate. The ECC has postponed a decision on the proposed amendments, reflecting the complexity and financial implications involved in the ongoing debate between the Power Division and the FBR.
