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Senate Finance & Revenue Committee for removal of additional indirect taxes from domestic electricity bills

Senate Finance & Revenue Committee for removal of additional indirect taxes from domestic electricity bills

ISLAMABAD: The Senate Standing Committee on Finance and Revenue has urged the Federal Board of Revenue (FBR) to revisit the policy of levying additional indirect tax in the electricity bills of the domestic consumers.

The committee in a report compiled on an issue raised by Senate Tahir Hussain Mashhadi in the House relating to the taxes levied on the electricity bills, recommended that all the additional indirect taxes including sales tax levied on electricity bills for domestic consumers must be waved off or rationalized.

The report said that committee expressed reservations and said that DISCOs were recovering 17% sales tax imposed on them though electricity bill from general public and suggested that the domestic consumers should be exempt4ed from all additional indirect taxes.

According to a well placed official source at FBR privy to the proceedings for the compilation of the said report told Customs Today that after the House had referred the issue to the Finance and Revenue committee, the FBR defended its stance with argument that sales tax and GST were the same tax which was imposed on the actual consumption of electricity.

Sales tax is being charged at the rate of 17% on all taxable supplies including electricity and it was applicable since 2013. Regarding extra tax, he said that it was 5% on the electricity supplied to industrial and commercial consumers (no registered I active taxpayers’ list of FBR) whose electricity bill exceeded Rs 15000 in a month.

Further tax of 2% was being charged on all supplies to unregistered persons; however, it was not applicable to the electricity supplied to domestic and agricultural consumers as per exclusion provided under the rules.  Except sales tax no additional tax was levied on domestic consumers by FBR, however, the surcharged were levied by the Ministry of Water and Power.