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ISLAMABAD: Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to review whole regime of Electricity Duty (ED) and taxes calculated on electricity bills with the help of Punjab Energy Department to provide relief to consumers and taxpayers.

In this regard, the FTO has issued directions to the FBR here on Thursday.

“All consumers/ taxpayers are being burdened with an excessive charges”, FTO order stated.

FTO directs FBR to streamline IT process

Electricity Duty (ED) is a provincial duty and is levied to all consumers ranging from 1.0 percent to 1.5 percent of all Variable Charges, included in the electricity bill.

Own Motion investigation under section 9(1) of the FTO Ordinance, 2000 was initiated against illegal tax withholding under section 235 of the Income Tax Ordinance, 2001 by power distribution companies and FBR’s apathy.

The FTO had received a complaint wherein some consumers of Islamabad Electric Supply Company (IESCO) agitated against unjust charging of taxes in monthly bills for the month of August, 2023. The complaint papers were examined and cross matched with legal provisions, as well as, withholding tax chart uploaded on FBR’s official website.

It was observed that IESCO has been charging and collecting tax withholding in cases where monthly bills are even much less than the prescribed threshold of Rs. 25000 per month. It was further observed that while income tax has been explicitly charged & collected illegally, the rationale and legal cover of remaining levies also need to be looked into.

According to the FTO’s order, the FBR should constitute a committee, comprising of members from Large Tax Office (LTO), Islamabad, IESCO and Punjab Energy Department to work out a strategy whereby whole regime of ED and taxes calculated thereon is reviewed so as to provide some relief to ordinary consumers and the taxpayers.

The discrepancies regarding non-transparent charging of electricity duty from all consumers, especially from residents of Islamabad Capital Territory (ICT) may be taken up by FBR with the concerned authorities for removal of discrepancy, FTO said. While examining the different components of billing it has been observed that Electricity Duty (ED) is being levied across the board, on all consumers, FTO said.

ED, charged & collected by Discos is not being timely remitted to Provincial Energy Departments, within given timelines. The power distribution companies, i.e., LESCO, FESCO, MEPCO, IESCO, and GAPCO, operating in the Province of Punjab tend to withhold ED collection for years and only after the reconciliation with the Government of Punjab and after adjustment of all unpaid bills of different Provincial Government Departments, the remaining amount of ED is paid. This reconciliation takes years and years.

Punjab Energy Department has unearthed thousands of fake & dormant meters which were being misused by Discos to inflate provincial government’s electricity bills. In other words, ED charged by the legislature to generate funds for further generation of power is being used to pay the current bills of provincial governments. No Tax law allows the collection to be used against day to day.

If the total unpaid ED is calculated across Pakistan, the figure runs into staggering amount. This is how an ordinary taxpayer and common consumer are being skimmed and provincial governments defrauded. All federal taxes worked out against the value of ED thus tantamount to excessive and unjust taxation and reflect clear incidence of maladministration, FTO order added.

Copyright Business Recorder, 2023

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Naheeda Shaikh Dec 01, 2023 09:01pm
FBR is a partner in crime. FBR is a big hurdle in tax collection in Pakistan
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