New rules unveiled for sales tax on electricity

Written by
New rules unveiled for sales tax on electricity

ISLAMABAD: By enacting proposed rules for the collection and payment of electricity tax, the federal government recently fulfilled a further requirement of the International Monetary Fund (IMF) for the reduction of circular debt.

The Federal Board of Revenue (FBR) has published Special Process Regulations 2023, which describe modifications to the tax collecting process, according to a document made available to The Express Tribune.

By the recent rules, the FBR would charge electricity distribution companies (DISCOs) sales tax on the actual sums paid by customers rather than the sums incurred on electricity bills.

rather than the reference number or meter number for this purpose, DISCOs would gradually link energy meters all across the nation with the numbers on users’ Computerised National Identification Cards (CNIC).

Consumers will then receive electricity bills based on their CNIC number. The electricity invoices for tenants will also include their computerized numbers.

A bill will be issued on the tenant’s identity card and they will be regarded as a defaulter if they don’t pay their monthly rent.

Monthly, the FBR will get information from DISCOs about unpaid electricity payments. The FBR and other organizations, such as PTV, will thereafter initiate legal action to pursue payment from defaulters on their own.

With the adoption of the regulations, power distribution firms will be required to collect sales tax on the amount recovered from customers rather than the amount billed. The new regulations are intended to lessen DISCOs’ lost revenues and circular debt.

A top FBR officer claims that the IMF‘s demand for the reduction of the circular debt is the reason behind these adjustments. In the past, a significant portion of DISCOs’ consumers did not pay their electricity bills, which caused a double loss of revenue for DISCOs.

Article Tags:
Article Categories:

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.