Federal Board of Revenue (FBR) has updated the rates of withholding tax on consumption of electricity by commercial and domestic consumers.
The FBR collects withholding tax on electricity consumption under Section 235 of Income Tax Ordinance, 2001. The tax rates have been revised through Finance Act, 2021 and implemented with effect from July 01, 2021.
Following are the updated withholding tax rates for electricity consumers of commercial and domestic connections.
The tax rate shall be collected on gross amount of electricity bill of commercial and industry consumers by persons preparing electricity bills along with payment of electricity consumption charges.
The tax rate shall be zero in case of commercial and industrial consumers if the electricity bill is up to Rs500.
The tax rate shall be 10 per cent of the amount in case of commercial and industrial consumers if the electricity bill exceeds Rs500 but does not exceed Rs20,000.
The tax rate shall be Rs1950 plus 12 per cent of the amount exceeding Rs20,000 for commercial consumers and Rs1950 plus 5 per cent of the amount exceeding Rs20,000 for industrial consumers if the electricity bills exceeds Rs20,000.
Following are the withholding tax rates on domestic consumers of electricity which will be collected by persons preparing electricity bill from domestic consumers of electricity not appearing on the Active Taxpayers List (ATL).
The withholding tax rate shall be zero in case the monthly bill of domestic consumer is less than Rs25,000.
However, the tax rate shall be 7.5 per cent of the bill if the amount of monthly bill is Rs25,000 or more.
The FBR said that tax collected/deducted withholding tax shall be:
(i) Adjustable In case of company.
(ii) In case of other than company tax collected on Rs, 360000 amount of annual bill will be minimum tax.
(iii) in case other than company tax collected on amount over and above Rs30000/- of monthly bill will be adjustable
(i) Minimum Tax for CNG Stations (Ref S.234A) (3).