The government is set to exempt the Rural Electrification Board from paying value-added tax worth Tk 101.75 crore for which the National Board of Revenue has a long-standing dispute with REB, officials said. At the same time, REB has also informed the revenue board that from April it started collecting VAT on meter rent from its consumers, they said. They said that power division had recently requested the revenue board for taking necessary steps in this regard saying that prime minister Sheikh Hasina has approved a proposal for exempting REB from paying the VAT.
Large Taxpayer Unit (LTU-VAT) of NBR has been demanding the money as VAT on meter rent which the REB collected from its consumers from February 2008 to December 2012.
According to the VAT act, 15 per cent VAT is applicable on meter rent.
But REB has been rejecting the demand and lobbying with the finance ministry and power division saying that it did not collect any VAT from its clients.
Officials of power division said that the prime minister has recently approved a proposal of exempting REB from paying the VAT as any move for realization of due VAT from clients might spark unrest among rural clients.
In such unrest at Kansat in Chapainawabganj in 2006, several people were killed in police firing resorted to control villagers who launched a movement in protest of realization of additional meter fees by REB.
REB has no fund for paying the VAT as it did not realsise the VAT from consumers, they said.
In future, REB will pay the VAT as it started deduction of VAT from consumers on meter rent from April, they said.
Officials of the revenue board said that they received such letter from the power division.
NBR high-ups will take the decision following the advice of finance minister Abul Maal Abdul Muhith who is now in USA and scheduled to return on October 17.
LTU (VAT) officials said that REB, a semi-autonomous agency which provides electricity services to rural consumers, collected a total of Tk 446.18 crore in meter rent from its consumers.
The total demand stood at Tk 101.75 crore including VAT and interest for non-payment of the VAT.
Of which, the NBR demanded Tk 66.93 crore as VAT on meter rent and Tk 34.82 crore in interest at the rate of 2 per cent on the principal amount.
The power division officials said REB’s financial health is not good although it has to maintain 2,45,000 kilometres electricity distribution line.
The REB’s liability to the government stood at Tk 4,577.25 crore until June 2013 since its establishment in 1977. REB operates its programme through its associations called Palli Bidyut Samity.
But 60, out of 70 such Samities, are facing financial problems.
At present, REB supplies electricity to around 9.4 million connections out of 14.2 million connections throughout the country.
-With New Age input
