Electricity bills in Pakistan often leave consumers puzzled. With numerous taxes and surcharges inflating the total payable amount. Beyond the cost of consumed electricity, these additional charges are a significant component of your bill. Understanding these taxes is essential for better budgeting and managing your household expenses.
In this article, we’ll explore what taxes are charged in electricity bills in Pakistan. And also we will illustrate their impact using a real-life example of a customer consuming 300 units of electricity monthly.
Breakdown of Taxes and Surcharges in Electricity Bills
1. General Sales Tax (GST)
The General Sales Tax (GST) is one of the largest components of electricity bills in Pakistan.
- Rate: 17% of the electricity consumption charges.
- Applicability: Residential, commercial, and industrial consumers.
Example Calculation:
For a monthly usage of 300 units, let’s assume the electricity cost is PKR 5,500. The GST would be:
5,500 × 17% = PKR 935.
2. Income Tax
Income tax varies depending on the consumer category and their electricity usage. It is typically small for residential customers and much higher for commercial or industrial consumers.
Example Calculation:
For a residential customer consuming 300 units, the income tax may be around PKR 100-200.
3. TV License Fee
The TV License Fee is a flat charge added to residential bills, irrespective of whether you own a television.
- Rate: PKR 35 per month.
- Purpose: This fee is used to fund the operations of Pakistan Television (PTV).
4. Electricity Duty
Electricity Duty is a provincial tax calculated as a percentage of the electricity charges.
- Rate: Around 1.5% of the electricity cost.
Example Calculation:
For a bill of PKR 5,500, the Electricity Duty would be:
5,500 × 1.5% = PKR 82.50.
5. Fuel Price Adjustment (FPA)
The Fuel Price Adjustment (FPA) accounts for changes in international fuel prices and is a variable charge.
- Rate: Depends on monthly fuel price fluctuations.
- Example Calculation: Assuming an FPA rate of PKR 2 per unit, the total FPA for 300 units would be:
300 × 2 = PKR 600.
6. Neelum-Jhelum Surcharge
This surcharge was introduced to fund the Neelum-Jhelum Hydropower Project.
- Rate: PKR 0.10 per unit.
- Example Calculation:
300 × 0.10 = PKR 30.
7. Withholding Tax (WHT)
Withholding Tax (WHT) applies to customers who are non-filers of income tax returns.
- Rate: 7.5% of the total electricity bill.
Example Calculation:
If the total bill (after adding all other taxes) is PKR 7,500, the WHT would be:
7,500 × 7.5% = PKR 562.50.
Total Additional Charges for 300 Units
Here’s a summary of the taxes and surcharges:
| Tax/Surcharge | Amount (PKR) |
|---|---|
| General Sales Tax (GST) | 935 |
| Income Tax | 100 |
| TV License Fee | 35 |
| Electricity Duty | 83 |
| Fuel Price Adjustment (FPA) | 600 |
| Neelum-Jhelum Surcharge | 30 |
| Withholding Tax (WHT)* | 562.50 |
| Total Additional Charges | 2,345.50 |
*For tax filers, WHT is not applicable.
This means a customer consuming 300 units per month would pay an extra PKR 2,345.50 in taxes and surcharges in addition to the base cost of electricity.
Key Takeaways
- Taxes Are a Large Portion of the Bill: Taxes and surcharges can increase your bill by more than 40%.
- GST Is the Largest Contributor: At 17%, GST forms a significant portion of the additional charges.
- WHT Penalizes Non-Filers: If you are not a tax filer, WHT adds an extra 7.5% to your bill.
- FPAs Vary Monthly: Keep an eye on Fuel Price Adjustments, as they depend on global oil prices.
- Efficient Usage Can Save Costs: Reducing electricity consumption also lowers the taxes associated with it.
- Tax Filing Reduces Costs: Becoming a tax filer eliminates WHT, reducing the total payable amount.
FAQs
Q1. What is the GST rate on electricity bills in Pakistan?
The GST rate is 17% of the electricity consumption charges.
Q2. How much is the TV License Fee, and who pays it?
The TV License Fee is PKR 35 per month, added to all residential electricity bills, regardless of whether the household owns a television.
Q3. What is the Fuel Price Adjustment (FPA)?
FPA reflects fluctuations in international fuel prices and is charged monthly or quarterly.
Q4. Can I avoid Withholding Tax (WHT)?
Yes, by filing your income tax returns, you can avoid paying WHT, which is 7.5% of the total bill for non-filers.
Q5. Why is my electricity bill so high despite moderate usage?
Taxes and surcharges like GST, FPA, and WHT significantly inflate the total payable amount beyond actual electricity consumption.
Understanding these charges empowers consumers to manage their electricity expenses better. While taxes and surcharges may seem unavoidable, steps like reducing consumption, filing taxes, and using energy-efficient appliances can help minimize the overall burden.
