ISLAMABAD: Electricity consumers across Pakistan pay approximately Rs. 620 billion every year in taxes through their power bills, officials from the Federal Board of Revenue (FBR) informed the National Assembly Standing Committee on Finance and Revenue on Wednesday.
During a briefing to lawmakers, FBR officials explained that the massive tax collection comes primarily from the 18 percent General Sales Tax (GST) charged on electricity consumption, along with withholding tax deducted from monthly electricity bills exceeding Rs. 100,000.
The taxes are collected by power distribution companies (DISCOs) and subsequently deposited with the FBR, making electricity bills one of the government’s most effective tools for revenue collection.
Electricity Bills Carry Multiple Taxes and Charges
The disclosure comes amid growing concerns over rising electricity costs for households and businesses. In addition to the actual cost of electricity, consumers are required to pay several additional charges on their monthly bills.
These include:
- General Sales Tax (GST)
- Withholding Tax
- Fuel Cost Adjustments (FCA)
- Electricity Duty
- TV License Fee for eligible consumers
- Quarterly Tariff Adjustments
- Other regulatory surcharges and levies
As a result, the final bill paid by consumers is often significantly higher than the actual cost of electricity consumed.
Utility Bills Becoming Key Revenue Source
The latest figures underscore the increasing reliance of the federal government on utility bills as a mechanism for tax collection and documentation of the economy.
Tax experts note that collecting taxes through electricity bills ensures higher compliance rates because consumers must pay their bills to avoid disconnection, making the system an efficient revenue collection channel for the government.
The Rs. 620 billion collected annually through electricity-related taxes represents a substantial contribution to the country’s overall tax revenues.
Finance Committee Approves Retailers Fixed Tax Scheme
During the same meeting, the National Assembly Standing Committee on Finance approved the Retailers Fixed Tax Scheme, despite reservations raised by some lawmakers regarding its implementation and potential impact on small businesses.
The scheme is part of the government’s broader strategy to expand the tax base and bring more retailers into the formal economy.
FBR to Launch AI-Powered Faceless Tax System
Committee members were also briefed on the FBR’s upcoming AI-driven National Faceless System, which is expected to be rolled out in phases starting from October 2026.
The new system aims to reduce direct interaction between taxpayers and tax officials by automating assessments, audits, and compliance processes through artificial intelligence and data analytics.
According to the FBR, the faceless taxation model is expected to improve transparency, reduce opportunities for corruption, and enhance tax administration efficiency as Pakistan moves toward a more technology-driven tax system.
