Karachi, September 12, 2023 – The rising concern over inflated electricity prices has brought to light a myriad of duty and taxes, in addition to government charges, that are embedded within electricity bills, impacting the daily lives of consumers.
iCouncil, an advisory company specializing in financial analysis and advisory services, has compiled a comprehensive list of duty and taxes found in electricity bills, shedding light on the financial burden faced by common citizens:
1. Electricity Duty: Provincial duty, which varies between one percent to 1.5 percent, is levied on variable charges for all electricity consumers.
2. General Sales Tax (GST): The General Sales Tax, as mandated by the Sales Tax Act of 1990, imposes an 18 percent tax on the total electricity bill for all consumer categories.
3. PTV License Fee: Domestic consumers are charged Rs 35, while commercial consumers are billed Rs 60 as a license fee, contributing to their electricity bills.
4. Financing Cost Surcharge: With the exception of lifeline domestic consumers, all other categories are subjected to a Rs 0.43 per kilowatt-hour (kWh) surcharge.
5. Fuel Price Adjustment (FPA): The Fuel Price Adjustment component reflects the gap between actual fuel charges and reference fuel charges. Positive variations in FPA increase electricity bills, whereas negative variations provide relief to consumers, as per the directives of the National Electric Power Regulatory Authority (NEPRA).
6. Extra Tax: Industrial and commercial consumers who are not listed as active taxpayers with the Federal Board of Revenue (FBR) are subject to an additional tax ranging from 5 percent to 8 percent, depending on the total bill amount.
7. Further Tax: A four percent tax is applied to consumers who do not possess a Sales Tax Registration Number (STRN), excluding domestic, agriculture, bulk, and streetlight connections.
8. Sales Tax: Commercial consumers bear a 5 percent sales tax for bills totaling less than Rs 20,000, and a 7.5 percent tax for bills exceeding this threshold.
9. Income Tax: The rate of income tax varies based on the total bill amount, with domestic consumers who are tax filers exempted from this tax. Non-tax filers face a 7.5 percent income tax charge if their electricity bill amount exceeds Rs 25,000.
The revelation of these extensive duties and taxes within electricity bills has sparked concerns among citizens, who are already grappling with the impact of rising utility costs on their household budgets. The added financial burden of these levies has led to calls for greater transparency and a reevaluation of the tax structure in order to provide relief to the general public.
As the issue gains traction, it remains to be seen whether there will be any policy adjustments or reforms to address these concerns and provide some respite to consumers faced with soaring electricity bills.