The Federal Board of Revenue (FBR) has announced that residents and businesses in the tribal areas have benefited from over Rs14 billion in electricity tax relief. This substantial exemption was granted under the Sales Tax Act, 1990.
Sales Tax Exemption Facilitated Through Sixth Schedule
According to the FBR’s latest tax expenditure report, the relief was made possible through the Sixth Schedule of the Sales Tax Act. This allowed for a sales tax exemption on electricity supply to both residential and commercial consumers within the tribal regions. However, the exemption specifically excluded the steel and ghee (cooking oil) industries operating in these areas.
Aimed at Socio-Economic Uplift After Merger
The FBR stated that the primary objective behind this tax exemption was to support the socio-economic development of the tribal areas following their constitutional integration with Khyber Pakhtunkhwa under the 25th Amendment. The FBR confirmed that this tax relief was applied to 152 instances of electricity supply from the date of the constitutional amendment’s enactment until June 30, 2023.
Industrial Units Also Benefited with Conditions
In addition to households and commercial entities, industrial units established and operational before May 31, 2018, were also eligible for the electricity tax exemption. This was with the same exceptions for the steel and ghee/cooking oil sectors. This measure aimed to support existing industries in the tribal areas while preventing potential misuse of the exemption by newer businesses in sectors already receiving other commercial advantages.
FBR officials emphasized that this tax relief aligns with the government’s broader commitment to integrate the tribal areas into the national economy. This includes ensuring access to essential utilities without the added burden of taxes. The exemption is intended to stimulate economic activity and ease financial pressure on regions facing infrastructural and social challenges.
Targeted Fiscal Measures for Development
The FBR’s report on electricity exemptions in the tribal areas underscores the significance of targeted fiscal policies in promoting inclusive development while maintaining fairness in the national tax system. The ongoing evaluation of tax policies will likely consider the impact and effectiveness of such measures.
