Income tax rates on electricity consumption

Income tax rates on electricity consumption

ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of income tax on consumption of electricity for the tax year 2021 (July 01, 2020 to June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

The FBR updated the following rates of income tax on electricity consumption under Section 235 of the Ordinance:

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

(a) does not exceed Rs. 400 – the tax rate shall be zero

(b) exceeds Rs. 400 but does not exceed Rs. 600 – the tax amount shall be Rs. 80

(c) exceeds Rs. 600 but does not exceed Rs. 800 – the tax amount shall be Rs. 100

(d) exceeds Rs. 800 but does not exceed Rs. 1000 – the tax amount shall be Rs. 160

(e) exceeds Rs. 1000 but does not exceed Rs. 1500 – the tax amount shall be Rs. 300

(f) exceeds Rs. 1500 but does not exceed Rs. 3000 – the tax amount shall be Rs. 350

(g) exceeds Rs. 3000 but does not exceed Rs. 4500 – the tax amount shall be Rs. 450

(h) exceeds Rs. 4500 but does not exceed Rs. 6000 – the tax amount shall be Rs. 500

(i) exceeds Rs. 6000 but does not exceed Rs. 10000 – the tax amount shall be Rs. 650

(j) exceeds Rs. 10000 but does not exceed Rs. 15000 – the tax amount shall be Rs. 1000

(k) exceeds Rs. 15000 but does not exceed Rs. 20000 – the tax amount shall be Rs. 1500

(l) exceeds Rs. 20000 – the tax amount shall be:

(i) at the rate of 12 percent for commercial consumers;

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

The text of Section 235 is as:

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

(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.

(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 or that he has discharged advance tax liability for the tax year.

(4) Under this section, —

(a) in the case of a taxpayer other than a company, tax collected upto 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.

The FBR also updated rate of tax to be collected from domestic consumers of electricity under Section 235A of the Ordinance:

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

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

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

The text of Section 235A is as follow:

235A. Domestic electricity consumption.- (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.

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.

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

(3) Tax collected under this section shall be adjustable against tax liability.

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