Gratuity, in addition to CPF: AGP questions power of ISGS board for irregular payment to employees
ISLAMABAD: Auditor General of Pakistan (AGP) has questioned the power of the board of Inter State Gas Systems (Pvt) Limited (ISGS) for irregular payment gratuity in addition to contributory provident fund (CPF) to its employees annually.
According to the website of the company, ISGS is a private limited Company incorporated under the Companies Ordinance, 1984 (Now Companies Act, 2017) and a wholly owned subsidiary of Government Holding (Pvt) Ltd. The company has a Board of Directors comprising nine members. The authorised share capital of the company is Rs20 billion.
In a Public Accounts Committee (PAC)'s sub-committee held on Tuesday discussed the authority of the board in light of observations of audit report 2012-13. Audit report of ISGS observed that facility of gratuity in addition to CPF was allowed to employees appointed after October 16, 1984. Thus payment of gratuity in addition to CPF of Rs5.25 million made was held irregular.
Federal government service rules provide for the various other benefits such as the pension, medical, accommodation, tuition, vacation, social security etc which are currently not applicable on the employees of the ISGS. These are competitive with the current prevailing market practices.
The CPF scheme was being run by the government for its employees and not the private funds created. In case of ISGS the separate funds were being maintained for the gratuity and provident fund and no payment for gratuity was made out of the CPF scheme and therefore, there was no violation of the part of the ISGS of the instructions of the Finance Division.
This would have been applicable if the ISGS provident fund had been part of the government provident fund scheme. Furthermore, finance consultation with Finance Division was not warranted when payment of remuneration/ bonus did not involve budgetary impact for government.
In another audit report year 2022-23 pointed out that Petroleum Division collected GIDC amounting to Rs354 billion up to June 30, 2023. These funds meant to be utilised on TAPI, IP and Pakistan Stream Gas Pipeline Project but progress on these mega gas infrastructure development projects were slow and no significant headway could be made resulting in non-utilisation of GIDC funds.
Copyright Business Recorder, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
4 hours ago
- Business Recorder
PARTLY FACETIOUS: There is a need for structural changes in taxation system
'Chairman FBR urged the Senate body to abolish the Seventh Schedule of the Income Tax Ordinance…' 'Which incidentally dates back to 2001.' 'Hey, that ordinance has been amended from time to time and like other countries remains largely valid…' 'Excuse me, but there is a need for structural change in our taxes – our reliance on withholding taxes that are levied in the sales tax mode, which you must know is an indirect tax whose incidence on the poor is greater than on the rich, but credited dishonestly by the FBR under direct tax collections…' 'They are kinda easy to collect – you appoint withholding agents from the private sector, increase their work load don't pay them a penny, and they collect it…' 'Look at the glass as half full: you collect more while you don't burden your staff and…' 'The private sector is reeling, let me cite the Finance Division's data on large scale manufacturing sector: negative 1.4 percent in the outgoing year, negative under 0.5 percent last year and this negativity…' 'The glass is half full, my friend.' 'Right besides the Chairman has claimed that enforcement measures have generated a close to 380 billion rupees and…' 'But the successful enforcements he mentioned were from indirect taxes, excise duty on….on was it sugar or cigarettes? And that tax is passed onto the consumers anyway, so…' 'Anyway one question, if the seventh schedule is abolished would the banks be as amenable to lending around 1.2 trillion rupees to the poorly performing power sector - money borrowed to retire the circular debt?' 'If you recall, the head of our premier intelligence agency did, how can I put it, convince the Independent Power Producers to agree to the renegotiations and….' 'I am aware of that, my question is if the banks do not get special treatment then would they agree to lending to a sector where they are over exposed and…' 'I am not sure, but why doesn't the Chairman consider generating revenue from some other source. India for example, generates huge amounts from its stock market activities…' 'Hey, our stock markets are used as a yardstick to assess government performance.' 'But the bulk of our population, the poor, the lower middle and middle income earners do not invest in the stock market…' 'Shut up silly. You don't know the macro picture.' 'I stand corrected.' Copyright Business Recorder, 2025
Business Recorder
19 hours ago
- Business Recorder
Adamjee Insurance to divest 6.5% stake in subsidiary
Adamjee Insurance Company Limited (AICL) has announced to divest 6.5% of its shareholding, amounting to 16.25 million shares, in its subsidiary, Adamjee Life Assurance Company Limited (ALIFE). The listed company disclosed the development in its notice to the Pakistan Stock Exchange (PSX) on Friday. 'The board of directors of Adamjee Insurance Company Limited (AICL) in its emergent meeting held on June 20, 2025, has decided to offload 16,250,000 shares, i.e. 6.5% shareholding of its subsidiary Adamjee Life Assurance Company Limited (ALIFE) through off-market trades on PSX Portal to comply with the free-float requirements under Clause 5.4.1. of the PSX Regulations,' read the notice. The company shared that following this transaction, AICL's shareholding in ALIFE will reduce to 208,750,000 shares, i.e. 83.5% from 225,000,000 shares, i.e. 90% of the paid-up capital currently held. Incorporated in Pakistan on September 28, 1960, under the repealed Companies Act, 1913, now the Companies Act, 2017, Adamjee Insurance is engaged in the general insurance business.
Business Recorder
a day ago
- Business Recorder
Meeting the water scarcity threat
EDITORIAL: For a problem of such scale as funding mega storage dams to deal with India's water aggression, slapping a 1 percent tax on every taxable product — except electricity and medicines — is not a solution; it's a panic response masquerading as policy. That this is the best the federation could come up with to counter what it itself calls an act of war — India putting the Indus Waters Treaty in abeyance — only highlights how limited its strategic thinking really is. The core issue isn't just about funding dams. It's about the quality of the national response to a growing existential threat. And it's becoming painfully clear that there isn't enough of it. Provinces won't contribute. The federal government, despite all the alarm, has cut water sector allocations by nearly 30 percent. The IMF, understandably, won't sign off on another broad-based tax when existing public development allocations are already underused or mis-prioritised. So if the 1 percent tax goes through, the burden will fall — yet again — on the already taxed sectors of the formal economy. No mention is made of how to involve, let alone tax, the very large undocumented economy. The state's numbers don't inspire confidence either. Diamer-Bhasha and Mohmand dams were approved in 2018. Seven years later, they still require Rs540 billion just to reach completion — and that too based on outdated cost estimates. Yet next year's budget allocates only Rs25 billion and Rs35.7 billion to them, respectively. At this pace, even the ministry of water resources admits it could take up to 20 years to finish the job. But the public is being told, without irony, that both will be completed by 2030. What's worse, the logic behind this new tax crumbles on contact with reality. The IMF has already advised the government to reprioritise within the Rs1 trillion Public Sector Development Programme (PSDP) envelope instead of adding another blanket levy. But of that trillion, only Rs640 billion is actually available. The rest is tied up in road projects, provincial schemes, and politically sensitive special area allocations. Clearly, priorities are elsewhere. There is also no discussion of accountability. The Gas Infrastructure Development Cess (GIDC) fiasco — where over Rs400 billion collected from the public still hasn't been deposited by private companies — hangs like a cautionary tale. It's one thing to announce a cess; it's quite another to recover and utilise it. Even the latest attempt to enforce GIDC collections, via a committee under the finance minister, is crawling along — exactly like all its predecessors. The method of legislation also raises eyebrows. Since the courts have ruled that cesses must be purpose-specific and passed via separate legislation, the government cannot route this through the Finance Act. Hence, the need for a new bill. But the timing is suspect — trying to quietly pass a new blanket tax amid ongoing IMF negotiations and budget debates, while bypassing real public discourse. And where are the provinces in all this? With the exception of Khyber Pakhtunkhwa, none is willing to co-fund what are clearly national priority projects. Sindh, for instance, has gone from a reported surplus of Rs395 billion in March to suddenly projecting a Rs38.5 billion deficit — directly undermining the IMF's target of Rs1.4 trillion in combined provincial surpluses. That makes coordination not just difficult but dysfunctional. This is not how strategic planning works. When the threat is as serious as a hostile upstream neighbour weaponising water, the response cannot be ad hoc taxation, weak coordination, and creative accounting. It requires hard conversations, difficult decisions, and, above all, clarity of purpose — none of which is currently in evidence. The question, then, isn't just whether this 1 percent tax is justified. It's whether the people being asked to pay it have any reason to believe the state knows what it's doing. Copyright Business Recorder, 2025
