Karachi, May 23, 2025 – In a massive revenue windfall, the Federal Board of Revenue (FBR) has collected a staggering Rs30 billion in withholding tax from electricity consumers in Karachi during the first ten months (July–April) of the current fiscal year 2024–25.
This marks a sensational 52% surge compared to Rs19.50 billion collected in the same period last year.
According to sources within the FBR, the sharp rise in tax collections stems from a combination of rising electricity tariffs and booming industrial demand in Karachi, Pakistan’s economic nerve center. The tax was primarily collected by K-Electric, the sole electricity distribution company serving the metropolis.
Officials said the hike in withholding tax is directly linked to increased power consumption and higher billing rates across both domestic and industrial sectors. “With Karachi’s industrial engines back in full throttle and temperatures soaring, electricity usage has skyrocketed — and so has the tax take,” a senior FBR official noted.
Under Section 235 of the Income Tax Ordinance, 2001, the FBR is authorized to collect advance tax on electricity bills from commercial, industrial, and high-consumption domestic users. The tax is calculated based on the total amount of electricity consumed and is tiered according to usage:
• No tax on monthly bills up to Rs500.
• 10% tax on bills exceeding Rs500 but not more than Rs20,000.
• For bills over Rs20,000, commercial consumers face Rs1,950 plus 12% of the excess amount, while industrial consumers pay 5%.
• Domestic users pay 7.5% only if the bill exceeds Rs25,000.
Consumers listed on the Active Taxpayers’ List (ATL) are granted exemptions under specific slabs.
The trend intensified in April 2025, with FBR recording Rs2.50 billion from Karachi’s electricity consumption alone — up from Rs1.64 billion in the same month last year.
Experts believe this surge highlights both the inflationary pressure on energy and the government’s intensified drive to plug fiscal gaps via indirect taxation. For Karachi, it reflects a paradox: rising power costs burdening households and businesses, while simultaneously fueling record FBR tax gains.
This extraordinary spike in tax collection may set the tone for future fiscal policy, with the FBR likely to maintain its focus on utility-based taxation as a reliable revenue stream.