Karachi, August 6, 2023 – The Federal Board of Revenue (FBR) has announced the latest tax rates for electricity consumption for the fiscal year 2023-24.
These updated rates, effective from July 01, 2023, apply to both residential and commercial/industrial consumers and were made in accordance with the changes brought about by the Finance Act, 2023 to the Income Tax Ordinance, 2001.
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The FBR collects withholding income tax under Section 235 of the Income Tax Ordinance. As per the new tax rates, the following provisions will be applicable to commercial and industrial consumers:
1. For a gross amount of bill up to Rs 500, the tax rate is set at zero.
2. For a gross amount of bill exceeding Rs 500 but not exceeding Rs 20,000, the tax rate is 10 percent of the amount.
3. For bills exceeding Rs 20,000, the tax rate will be Rs 1,950 plus 12 percent of the amount exceeding Rs 20,000 for commercial consumers and Rs 1,950 plus 5 percent of the amount exceeding Rs 20,000 for industrial consumers.
As for domestic consumers of electricity, the tax is only applicable to individuals who are not listed on the Active Taxpayers List (ATL). The tax rates for domestic consumers are as follows:
1. If the monthly bill is less than Rs 25,000, the tax rate will be zero percent.
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2. If the monthly bill amounts to Rs 25,000 or more, the tax rate will be 7.5 percent.
It is important for consumers to be aware of these updated tax rates to ensure proper compliance with the law. The FBR’s move to introduce differential tax rates based on the amount of electricity consumed aims to promote energy conservation and improve tax collection efficiency.
This latest update by the FBR serves as a significant step towards enhancing transparency and fairness in the tax system, and it is expected to have a positive impact on the overall revenue collection for the government. The FBR urges all consumers to review their electricity bills and ensure accurate tax deductions in accordance with these new rates to avoid any potential penalties or complications.
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For any further queries or clarifications regarding these tax rates, consumers can reach out to the Federal Board of Revenue or consult with qualified tax advisors to navigate through the tax implications effectively.
