Karachi, December 27, 2023: The Federal Board of Revenue (FBR) has unveiled a detailed procedure for the collection of extra sales tax on electricity and natural gas from industrial and commercial connections.
The updated Sales Tax Rules, 2006, applicable for the tax year 2024, provide clarity on the collection process.
Rule 158I: Application
The new regulations outlined in Chapter 158 of the Sales Tax Rules specifically apply to the supplies of electric power and natural gas consumed by individuals with industrial or commercial connections.
Rule 158J: Mode and Manner of Collection
1. Charge and Collection: Every supplier of electric power or natural gas is mandated to charge and collect extra tax from consumers having industrial or commercial connections, where the monthly bill exceeds rupees fifteen thousand. This applies to consumers whose names do not appear on the Active Taxpayer List.
2. Separate Display: The amount of extra tax must be displayed separately in the bill or invoice for electric power or natural gas issued by the supplier.
3. Collection and Payment: Suppliers are required to collect and pay the extra tax amount in accordance with the guidelines outlined in section 6 of the Act.
Rule 158K: Conditions and Limitations
1. Non-adjustable Tax: The amount of extra tax collected is not adjustable by either the supplier or the consumer in their returns. It must be paid in full by the supplier into the Treasury.
2. Verification of Taxpayer Status: Suppliers are obligated to request consumers to communicate their sales tax registration number and verify it from the Board’s website to confirm registration and active taxpayer status.
3. Confirmation of Information: Suppliers must confirm that the consumer’s details match those in the registration profile maintained by the supplier.
4. Declaration of Multiple Places of Business: Consumers with multiple places of business must ensure that all locations are properly declared and entered into their registration profile.
5. Incorporation of Sales Tax Number: Once verified, the supplier must incorporate the sales tax registration number in its billing system and ensure it is printed on all subsequent bills. Extra tax collection ceases for taxpayers on the Active Taxpayer List.
6. Resumption of Extra Tax Collection: Suppliers resume charging and collecting extra tax from consumers who are de-registered or cease to exist on the Active Taxpayers List maintained by the FBR.
The introduced rules aim to streamline the process of collecting extra tax on electricity and natural gas, ensuring transparency and compliance with tax regulations. Consumers and suppliers are urged to familiarize themselves with the updated procedures to avoid any discrepancies in tax collection and payment.
