| Karachi: The Federal Board of Revenue (FBR) has started collecting an additional 4% tax on electricity bills for individuals who are not a part of the Active Taxpayers List (ATL), as per a news published on September 1.
Read: Citizens rush to become tax filers amidst soaring electricity bills
The additional 4% tax on electricity bills is labelled as part of the sales tax and is charged in addition to the existing 18% sales tax. The recently updated Sales Tax Act for the fiscal year 2023-24, as clarified by the FBR, defines the scope of this taxation. According to the document, a sales tax rate of 18% is now applicable to:
(a) taxable supplies made by registered individuals as part of their taxable business operations; and
(b) imported goods into Pakistan, regardless of their intended use within the country.
Moreover, the document outlines that when taxable supplies are made to individuals without registration numbers or those classified as non-active taxpayers, an additional tax is levied at a rate of 4% on the supply’s value. This is in addition to the standard sales tax rate.
Read: Tax rates hiked for non-filers as FBR seeks to broaden tax base
However, it’s important to note that the federal government retains the authority to specify the categories of taxable supplies exempt from this additional tax.
One noteworthy change is that the rate of further tax was increased from 3% to 4% through the Finance Act of 2023, effective as of July 1, 2023. The implementation of this higher tax rate on unregistered or inactive taxpayers has resulted in higher electricity bills for individuals who are legally obligated to obtain sales tax registration but have remained outside the tax system thus far. |
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