Income Tax Ordinance 2001: advance tax on electricity consumption

KARACHI: Power supply companies are required to deduct and collect advance tax from industrial and commercial consumers at rates specified.

According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR), the Section 235 explained the rates of advance tax on consumption of electricity.

Section 235: Electricity consumption

Sub-Section (1): There shall be collected advance tax at the rates specified in Part-IV of the First Schedule on the amount of electricity bill of a commercial or industrial consumer.

Rate of collection of tax under section 235 where the gross amount of electricity bill

(a) does not exceed Rs. 400 Rs. 0
(b) exceeds Rs. 400 but does not exceed Rs. 600 Rs. 80
(c) exceeds Rs. 600 but does not exceed Rs. 800 Rs. 100
(d) exceeds Rs. 800 but does not exceed Rs. 1000 Rs. 160
(e) exceeds Rs. 1000 but does not exceed Rs. 1500 Rs. 300
(f) exceeds Rs. 1500 but does not exceed Rs. 3000 Rs. 350
(g) exceeds Rs. 3000 but does not exceed Rs. 4500 Rs. 450
(h) exceeds Rs. 4500 but does not exceed Rs. 6000 Rs. 500
(i) exceeds Rs. 6000 but does not exceed Rs. 10000 Rs. 650
(j) exceeds Rs. 10000 but does not exceed Rs. 15000 Rs. 1000
(k) exceeds Rs. 15000 but does not exceed Rs. 20000 Rs. 1500
(l) exceeds Rs. 20000. (i) at the rate of 12 per cent for commercial consumers;

(ii) at the rate of 5 per cent for industrial consumers.

Sub-Section (2): The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

Sub-Section (3): Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax.

Sub-Section (4): Under this section, —

(a) in the case of a taxpayer other than a company, tax collected up to bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;

(b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and

(c) in the case of a company, tax collected shall be adjustable against tax liability.

Section 235A: Domestic electricity consumption

Sub-Section (1) There shall be collected advance tax at the rates specified in Division XIX of Part IV of the First Schedule on the amount of electricity bill of a domestic consumer.

The rate of tax to be collected under section 235A shall be-

(i) 7.5% if the amount of monthly bill is Rs. 75,000 or more; and

(ii) 0% the amount of monthly bill is less than Rs. 75,000.

Explanation.— For removal of doubt, it is clarified that for the purposes of this section, electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

Sub-Section (2): The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

Sub-Section (3): Tax collected under this section shall be adjustable against tax liability.

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