Bangladesh Power Development Board (BPDB) is supposed to pay the taxes on bulk sales of electricity during a 12-month period.

In a letter to National Board of Revenue (NBR) on November 11, 2021, Power Division said the revenue board collected six percent tax at sources from the BPDB as a single buyer of electricity. 

The tax was realised under the section of 52N (1984) of the Finance Act 2021, it said.

NBR also collected six percent tax at sources from BPDB and other IPPs as producers of electricity, the letter said.

“Power tariff may be raised if the board will continue to collect the six percent tax at sources from bulk and retail power tariff,” the Power Division letter read.

Power Division requested to the NBR for withdrawing the income tax provision at sources on bulk power tariff, it said.

BPDB chairman Engr Balayet Hossain said the board produced 78,525 gigawatts of electricity at a cost of TK 500 billion.

He added the government needed to pay Tk 1.49 per unit of electricity as subsidy against the production cost of TK 6.61 per unit.  “We therefore request NBR to withdraw the provision on tax at sources,” the official said. 

He said the waiver of the tax will help stabilise power tariff and power generation cost.

Around Tk 24 billion to Tk 30 billion to be spent for tax at sources, BPDB sources said.

BPDB suffered a loss of Tk 119.69 billion in the fiscal year 2020-21 as it supplied electricity at a subsidised rate against the generation and purchasing cost.

The Power Development Board sought Tk 164.37 billion additional fund in the current fiscal year due to tariff hike of fuel in the international market.

The fund will be usedto run maximum 5500MW furnace oil-based power plants and 1200MW diesel-fired plants.

Besides, the tariff hike of the liquefied natural gas also increased the burden of subsidy, officials said.