ISLAMABAD: The Federal Board of Revenue (FBR) has reported a substantial 55% increase in tax collection from electricity bills for the month of March 2025, reflecting a surge in energy consumption driven by rising industrial and commercial activity.
According to FBR sources, the Large Taxpayers Office (LTO) Karachi recorded Rs2.14 billion in tax collection from electricity bills in March 2025, a significant jump from Rs1.38 billion during the same month last year. The FBR attributed this sharp increase to a spike in electricity usage across various sectors, spurred by expanding industrial production and prolonged commercial operations during Ramadan.
FBR officials noted that the early arrival of summer also contributed to higher electricity demand, with air-conditioning and refrigeration loads increasing in both residential and commercial sectors. Ramadan’s extended market hours further drove up electricity consumption, resulting in greater tax inflows from power bills.
On a cumulative basis, the LTO Karachi has collected Rs27 billion in taxes from electricity bills between July 2024 and March 2025, up from Rs17.68 billion in the corresponding period of the previous fiscal year. This 53% year-on-year growth is seen as a key indicator of economic momentum, though the FBR acknowledged that high electricity prices also played a role in boosting tax figures.
The FBR collects this tax under Section 235 of the Income Tax Ordinance, 2001, which mandates the collection of advance tax on electricity consumption by commercial, industrial, and certain domestic users. The tax is applied directly through monthly power bills, varying by consumer category and usage level.
Under this section:
• Commercial consumers face a 10% tax on bills between Rs500–20,000 and a higher rate for bills exceeding Rs20,000.
• Industrial consumers are charged a 5% tax on large bills.
• Domestic consumers are exempt if bills are under Rs25,000, but taxed at 7.5% if they exceed that threshold.
The FBR clarified that consumers listed on the Active Taxpayers List (ATL) may enjoy exemptions or adjustments, while others are subject to minimum tax rules or may need to present certificates to avoid double taxation.
With the government recently announcing cuts in electricity tariffs, the FBR expects the tax collected through electricity bills to normalize in the coming months. However, the March performance reflects strong compliance and robust consumption, both crucial for sustaining revenue momentum.
