Tax collection through power bills mounts

LAHORE: Tax collection through power bills has mounted up gravely in recent years. Successive governments have found it an easy way to generate revenue through indirect taxes levied on power bills.

In the last three years, such tax collections surged to Rs 1,410 billion. Much to the dismay of consumers, the tax collection rate on electricity bills has been doubled in two years. More than Rs 345 billion tax receipts were generated from electricity consumers in 2021, Rs 461 billion in 2022 and more than Rs 603 billion in 2023.

The tax collection is in addition to the actual cost of electricity charged from the customers. The government managed to collect infamous PTV fees amounting to Rs 25.70 billion and income tax receipts of Rs 180 billion while the consumers were made to pay Rs 89.69 billion on account of additional taxes. Typically, a consumer has to pay up to 35 per cent more than his or her energy cost in the form of various taxes imposed through monthly electricity bills.

According to the Power Division, different taxes, duties and surcharges are recovered through electricity bills from various categories of consumers. The Electricity Duty, a provincial duty, is levied on all consumers ranging from 1.0% to 1.5% of variable charges. General Sales Tax (GST) is levied on all consumers at the rate of 17% of the bill. PTV License Fee is being charged @ Rs 35/- for domestic consumers and Rs 60/- for commercial in the electricity bills. Financing Cost Surcharge is charged @ Rs 0.43 per kWh, applicable to all categories of consumers except life-line domestic consumers. Extra Tax is being charged from industrial and commercial consumers (not registered in active tax payer list of the FBR) @ 5% to 17%, on different bill amount slabs. Further Tax is being charged at the rate of 3% from all consumers having no Sales Tax Return Number (STRN) except domestic, agriculture, bulk consumers and streetlight connections. Income Tax is being charged from consumers at various rates depending upon applicable tariff and the amount of electricity bill. Sales Tax is charged @ 5% from commercial consumers on bills up to Rs 20,000 and 7.5% on bills exceeding Rs 20,000.