KARACHI: Consumers in Karachi paid more than Rs26 billion in advance income tax through their electricity bills during fiscal year 2025-26 (FY26).
Despite the substantial collection, the Federal Board of Revenue (FBR) recorded a 23 percent decline compared with the previous fiscal year, reflecting lower electricity consumption from the national grid as more consumers switched to rooftop solar systems.
K-Electric, the sole electricity distribution company serving Karachi, collects advance income tax from consumers through monthly electricity bills on behalf of the FBR. The tax is administered by the Large Taxpayers Office (LTO) Karachi.
Rooftop solar reduces tax receipts
FBR officials attributed the decline in tax collection mainly to the rapid adoption of rooftop solar installations by industrial, commercial and residential consumers.
“The consumers, including industrial, commercial and domestic users, have increasingly shifted to rooftop solar, significantly reducing electricity consumption from the national grid and, consequently, the amount of advance income tax collected through electricity bills,” a senior FBR official said.
Officials also noted that changes in electricity tariffs during the fiscal year influenced the overall collection of advance income tax under this category.
Lower electricity costs may boost economic activity
According to FBR officials, lower electricity costs could support industrial production and economic activity over the longer term, potentially leading to stronger tax revenues from business expansion and higher output.
They added that improving industrial activity during the latter part of FY26, coupled with higher international oil prices, contributed to better monthly tax collections towards the end of the fiscal year.
June collections post year-on-year growth
Despite the overall annual decline, advance income tax collection through Karachi’s electricity bills increased during the final month of the fiscal year.
The FBR collected Rs2.81 billion under this head in June 2026, compared with Rs2.51 billion in June 2025, representing a 12 percent year-on-year increase.
The latest figures highlight the evolving energy consumption pattern in Karachi, where rising investment in rooftop solar energy is reducing dependence on the national electricity grid while also affecting government revenues linked to electricity consumption.
