Islamabad, February 10, 2026 – The Federal Board of Revenue (FBR) on Tuesday reported a sharp 21 percent decline in income tax collection on electricity consumption during the first seven months (July to January) of the ongoing fiscal year 2025-26, reflecting subdued economic activity and lower electricity usage by commercial and industrial consumers.
According to provisional figures released by the tax authority, the FBR collected Rs76 billion as advance income tax on electricity consumption during 7MFY26, compared to Rs96 billion collected during the same period of the previous fiscal year, showing a significant year-on-year contraction.
January 2026 Performance
On a year-on-year (YoY) basis, income tax collection from electricity consumption in January 2026 declined by 15 percent, falling to Rs8.55 billion from Rs10 billion recorded in January 2025. The decline is attributed to reduced power consumption, slowdown in industrial activity, and lower electricity tariffs impacting usage patterns.
Tax Collection Mechanism
Electricity distribution companies (DISCOs) collect advance income tax from consumers through electricity bills on behalf of the FBR under Section 235 of the Income Tax Ordinance, 2001. This mechanism serves as a major source of direct tax collection, particularly from commercial, industrial, and high-end domestic consumers.
Analysts’ View
Tax experts believe that rising energy costs, inflationary pressures, and slower industrial output have contributed to reduced electricity usage, directly impacting tax collection. They also point to increased reliance on alternative energy sources such as solar power, which may be gradually lowering grid-based electricity consumption.
Income Tax Collection on Electricity Consumption (Rs Billion)
| Period | FY25 | FY26 | Change |
| July–January (7MFY) | 96.0 | 76.0 | -21% |
| January (YoY) | 10.0 | 8.55 | -15% |
Tax Rates on Electricity Consumption (Section 235)
Commercial & Industrial Consumers
| S. No | Gross Amount of Bill | Tax Rate |
| 1 | Up to Rs. 500 | Rs. 0 |
| 2 | Exceeds Rs. 500 but does not exceed Rs. 20,000 | 10% of the bill amount |
| 3 | Exceeds Rs. 20,000 | Commercial: Rs. 1,950 + 12% of amount exceeding Rs. 20,000 Industrial: Rs. 1,950 + 5% of amount exceeding Rs. 20,000 |
Domestic Consumers
| Monthly Bill Amount | Tax Rate |
| Less than Rs. 25,000 | 0% |
| Rs. 25,000 or more | 7.5% |