Islamabad: On August 4, 2022, Dr. Miftah Ismail conducted a meeting in the committee room of the Ministry of Finance, Pakistan Secretariat, to finalize the collection of sales tax through electricity bills.

Previously withdrawal of sales tax through electricity bills was demanded by stakeholders, including service providers who were not under the jurisdiction of the federal tax authority

The illogical implementation of a fixed tax scheme sparked widespread outrage, forcing the administration to reconsider its decision. The finance minister of Pakistan headed the meeting. 

The Ministry of Finance made the following decisions in the meeting:

The fixed tax scheme introduced by Finance ac 2022 will be rolled out ab initio, and the retailers will continue to pay taxes as per the previous (pre-budget) mechanism and rates.

• For the next three (3) months, i.e., July to September 2022, the previous tax rates will continue to apply to the retailer.

• The government will review the situation and notify new tax rates effective from October 01, 2022.

• For the reversal of the fixed tax scheme, necessary legislation would be enacted by the FBR as soon as possible. 

Retail tax payment through electricity bills has been in the field since 2014, when merchants with electricity bills up to Rs20,000 were required to pay sales tax at the rate of 5%, and statements above Rs20,000 were liable to pay sales tax at the rate of 7.5% through their electricity bills.

Earlier the government announced that small retailers (except those defined as Tier – 1) would pay fixed taxes based on monthly commercial electricity billings. Learn More: https://www.activefiler.com/fbr-simplifies-tax-payments-for-retailers-through-electricity-bills/