Karachi, April 5, 2025 – K-Electric (KE) consumers have collectively paid a staggering Rs 25 billion as advance tax during the first eight months (July–February) of the current fiscal year 2024–25, marking a substantial increase in financial pressure amid rising energy costs.
Data released by the Federal Board of Revenue (FBR) reveals that the advance tax collection from KE consumers surged by 56% compared to the Rs 16 billion collected during the same period in the previous fiscal year. According to FBR officials, the primary driver behind this surge is the continued escalation of electricity prices, which has increased the overall tax liability on KE’s wide consumer base.
Serving over 3.7 million customers, KE plays a central role in Karachi’s energy landscape, overseeing generation, transmission, and distribution of electricity across a vast network spanning 6,500 square kilometres. Its services extend beyond Karachi, covering Dhabeji and Gharo in Sindh, and Uthal, Vinder, and Bela in Balochistan. KE consumers—ranging from residential users to large-scale industrial and commercial entities—form a significant tax base under the FBR’s electricity billing framework.
Advance tax on electricity consumption is enforced under Section 235 of the Income Tax Ordinance, 2001. This legal provision mandates the collection of tax directly through electricity bills for specific categories of consumers. For KE consumers, this means an automatic deduction based on their consumption levels and category, with the tax amount escalating in tandem with energy usage.
Key Provisions of Section 235 Include:
• Sub-section (1): Imposes advance tax at rates detailed in the First Schedule. Domestic KE consumers listed on the Active Taxpayers’ List (ATL) are exempt.
• Sub-section (2): Requires KE to collect this tax alongside sales tax and other applicable charges.
• Sub-section (3): Exemptions are available for individuals with proof of income exemption, or those who have already paid advance tax under Section 147.
• Sub-section (4): For individuals whose annual bill does not exceed Rs 360,000, the advance tax becomes a minimum tax. For companies, the paid amount is adjustable against their annual tax liability.
Applicable Tax Rates:
• No tax for electricity bills up to Rs 500.
• 10% tax for bills between Rs 501 and Rs 20,000.
• 12% tax plus Rs 1,950 for commercial KE consumers with bills above Rs 20,000.
• 5% tax on high-value industrial consumption.
• 7.5% tax for domestic KE consumers on bills exceeding Rs 25,000.
Notably, in February 2025 alone, KE consumers contributed Rs 4.20 billion in advance tax, representing a sharp 61% increase from Rs 2.61 billion in February 2024. This underscores the growing financial burden on KE consumers amid surging electricity prices and consistent taxation policies.
As energy costs continue to rise, KE consumers are expected to remain significant contributors to national tax revenues through advance tax collections.