Karachi, August 30, 2023 – The Federal Board of Revenue (FBR) has announced a new method for retailers to pay their income tax through their monthly electricity bills.
This significant change is part of the updated Income Tax Ordinance, 2001, which became effective from July 1, 2023.
Under the revised ordinance, Section 99A outlines the procedure for collecting income tax from retailers using their electricity connections. This provision is specifically designed for retailers other than Tier-I retailers, as defined in the Sales Tax Act, 1990 (VII of 1990), and specified service providers who are using commercial electricity connections.
Key points from Section 99A of the Income Tax Ordinance include:
Tax Collection: Income tax will be charged and collected from eligible retailers via their commercial electricity connections. The rates at which this tax will be collected are specified in the income tax general order issued by the FBR.
FBR’s Authority: The Federal Government or the FBR, with approval from the Minister in-charge following the Economic Coordination Committee of the Cabinet’s approval, can issue an income tax general order. This order will cover various aspects, including the scope, timing, payment, recovery, penalties, default surcharges, adjustments, refunds, and more, related to the tax payable under this section.
Collection Methods: The order can specify whether tax should be collected based on the amount of the electricity bill or on any consumption basis. It may also specify rates, conditions, and effective dates for the tax collection. Additionally, it may outline the record-keeping, filing of returns, statements, and assessment procedures.
Mechanism and Application: The order can provide mechanisms for the collection, deduction, and payment of tax for individuals or groups. It can also determine which persons or classes of persons, as well as types of income or classes of income, are included or exempted from this section.
Adjustability: The order can specify whether the tax collected under this section is adjustable, final, or minimum concerning any income, to what extent, and under what conditions.
Application of Other Provisions: Sub-section (1) of section 235 will apply to the individuals specified therein unless they are specifically exempted under the income tax general order issued under sub-section (2). Section 100BA and rule 1 of the Tenth Schedule will not apply to the tax collectible under this section unless provided for in the income tax general order.
This change in tax collection methods is aimed at streamlining the process for retailers and ensuring more efficient revenue collection. It provides a mechanism for the government to collect taxes from retailers directly through their electricity bills, making the process more convenient and accessible.