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What is the GIDC and why is it important to talk about it?

What is the GIDC and why is it important to talk about it?

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The Gas Infrastructure Development Cess was created in 2011 and imposed as a levy by the Pakistan People’s Party government on gas consumers from the industrial sector.

It was initially set up to aid collection of money for the construction of infrastructure projects such as the Iran-Pakistan pipeline, the Turkmenistan-Afghanistan-Pakistan-India pipeline and Liquified Natural Gas projects. But since then, the history of the GIDC has been complicated. 

In November 2013, when the PML-N came into power, the Peshawar High Court declared the levy of the GIDC unconstitutional and therefore illegal, demanding that the money collected be returned. The government challenged this in the Supreme Court, but it ruled in favour of benching the GIDC.

The court upheld the decision of the PHC and declared that the GIDC as a fee and not a compulsory tax.  

Two years later, in 2015, the GIDC was re-imposed through legislature before industrialists took the government to court over the matter once again. This means that the GIDC, which was originally imposed to fund the construction of new gas pipelines and LNG facilities, remained in litigation for over 8 years. This act re-established the GIDC, much to the anger of the industrial sector which stated the earlier tax money was in fact not used for infrastructure projects.

Despite this, the fertiliser and compressed natural gas (CNG) companies still paid back half of levy imposed. 

Fast forward to the future, in September 2019, the PTI run government imposed a presidential ordinance dismissing the PKR 400 billion of GIDC levy. However, the issue soon became controversial with people thinking it was done as a favour to the corporate sector. But many failed to overlook the impact imposing the GIDC would have on Pakistan’s agriculture sector, especially farmers. The government’s decision to reverse their earlier verdict only led to further backlash over its hasty decision on such a monumental issue. 

The issue of GIDC still remains in litigation, with the final verdict pending.

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