Karachi, April 15, 2025 – The Federal Board of Revenue (FBR) has reported that consumers in the tribal areas benefited from a significant tax relief of over Rs14 billion on the supply of electricity, granted through a sales tax exemption under the Sales Tax Act, 1990.
In its latest tax expenditure report, the FBR revealed that the exemption was made possible through the Sixth Schedule of the Sales Tax Act, which allowed for tax-free electricity supply to both residential and commercial users in the tribal areas, with specific exceptions. Notably, this exemption did not apply to the steel sector and the ghee or cooking oil industries operating in the region.
According to the FBR, the objective behind this exemption was to support the socio-economic uplift of the tribal areas following their constitutional merger with Khyber Pakhtunkhwa under the 25th Amendment. The FBR confirmed that the tax relief was granted on 152 separate instances of electricity supply from the date of enactment of the constitutional amendment until June 30, 2023.
The FBR specified that in addition to household and commercial consumers, industrial units established and operational before May 31, 2018, also qualified for this electricity tax exemption—again, with the exception of the steel and ghee/cooking oil sectors. This move was aimed at encouraging industrial continuity in the tribal areas while preventing misuse of exemptions by newer entities in sectors already enjoying broader commercial incentives.
Officials from the FBR emphasized that this relief package was in line with the government’s broader commitment to integrate the tribal areas into the national economy, ensuring access to essential utilities without the burden of additional taxes. The exemption not only supported economic activity but also reduced financial strain on underdeveloped regions already grappling with infrastructural and social challenges.
As the FBR continues to evaluate its tax policies, the case of electricity exemptions in the tribal areas highlights the importance of targeted fiscal measures aimed at promoting inclusive development while maintaining tax equity nationwide.