Request denied: Centre refuses to exempt PEDO from income tax

K-P authorities vow to fight battle in court over matter.

PESHAWAR: The federal government has turned down the request of the province to exempt the Pakhtunkhwa Energy Development Organization (PEDO) from income tax.

Sources close to the development said the federal government has turned down the request and did not include PEDO for tax exemption in the Finance Bill 2016-17. The only way out now for K-P government is to knock on the court’s door.

The K-P finance department wrote a letter to the Federal Ministry of Finance and Federal Board of Revenue (FBR) chairman, asking that PEDO be exempted from taxes along the same lines as Wapda. However, the federal government denied the request.

A copy of the K-P finance department’s letter, sent on May 29, is available with The Express Tribune. It proposed amendments in the Income Tax Ordinance, 2001 Amended 2015. The letter suggested a new entry in Clause 66 of Part-1 of the second schedule of the ordinance through which PEDO would be included in the list of entities which are exempt from income tax.



It also proposed an amendment in Clause 132 of Part-1 of the second schedule of the ordinance.

“We will fight our case in court as we are left with no other choice,” said a senior official of the K-P government. The official added they had already taken a stay order from Peshawar High Court in a case, thus restraining FBR from charging income tax from the revenue generated by PEDO through hydel projects.

“The finance ministry has not included our request in the Finance Bill 2016-17,” the official said.

He added like Wapda, PEDO sells electricity to National Transmission and Dispatch Company (NTDC) Limited. However, the former is exempt from income tax while the latter is not. “We want income tax exemption at par with Wapda and we will fight our case in the court apart from taking up the matter on the political front.”

The official said FBR claims to have Rs1.6 billion in income tax against PEDO over the revenue generated by selling electricity to NTDC.



PEDO is providing hydro electricity produced by Malakand-III, an 81-megawatt capacity hydropower project. It is charging Rs4 per kilowatt an hour, the official said. “We took out our money from banks before the FBR could deduct its claimed amount of Rs1.6 billion under income tax.”

“We will have to ask National Electric Power Regulatory Authority (NEPRA) to include income tax in the tariff.

When contacted, K-P Minister for Energy and Power Muhammad Atif Khan said their demand was legitimate. He added  PEDO is also a government organisation, just like Wapda that is exempt from paying taxes.

Published in The Express Tribune, June 11^th, 2016.