ISLAMABAD: The Federal Board of Revenue (FBR) has initiated the collection of a further tax at a rate of four percent on electricity bills for individuals who are not listed in the active taxpayers list (ATL), as per an official document.
This additional tax is categorized as part of the sales tax and is collected in addition to the standard 18 percent sales tax rate.
The updated Sales Tax Act for the year 2023-24, as explained by the FBR, specifies the scope of this tax. According to the document, sales tax is imposed at a rate of eighteen percent on:
(a) taxable supplies made by a registered person as part of their taxable business activities; and
(b) goods imported into Pakistan, regardless of their ultimate destination within the country.
The document further elaborates that in cases where taxable supplies are made to individuals who have not obtained a registration number or who are not considered active taxpayers, an additional further tax is imposed at a rate of four percent on the value of the supplies. This is in addition to the standard rate of sales tax.
However, the federal government retains the authority to specify the types of taxable supplies for which the further tax will not be applicable.
It’s worth noting that the rate of the further tax was increased from three percent to four percent through the Finance Act of 2023, effective from July 1, 2023. The application of this higher rate of further tax on unregistered or inactive taxpayers has led to an increase in electricity bills for individuals who are legally obligated to obtain sales tax registration but have thus far remained outside the tax system.
