ISLAMABAD: President of Pakistan has confirmed Federal Tax Ombudsman’s decision to alleviate miseries of power consumers by rationalizing income tax and sales tax on electricity bills of low-income earners across the country.
In this regard, the president has issued a ruling against the FBR here on Monday.
The FTO’s directive, urging the formation of a committee by the Federal Board of Revenue (FBR) to address excessive taxation on electricity bills, has received validation from President of Pakistan. This decision follows the rejection of 20 representations filed by the FBR challenging the FTO’s orders.
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Under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000, complaints were lodged by individuals, predominantly low-income earners, contesting the withholding of Income Tax and Sales Tax on their electricity bills. Despite their earnings falling below the taxable income threshold, they were subjected to various taxes, prompting them to seek recourse through the FTO.
The FTO’s investigation revealed a uniform imposition of Electricity Duty (ED) on consumers, regardless of income levels, exacerbating the financial burden on taxpayers. Furthermore, discrepancies were noted in the timely remittance of ED to Provincial Energy Departments, with instances of misuse and misallocation of collected funds.
Of particular concern was the absence of clarity regarding the legal status of ED collection by distribution companies, raising questions about the legitimacy of associated taxes levied by the FBR. Additionally, revelations of cross-provincial discrepancies and outstanding dues highlighted systemic deficiencies in the taxation framework.
To address these issues, the FTO recommended the establishment of a committee comprising members from relevant departments, including LTO, LESCO, and Punjab Energy Department.
This committee would devise strategies to review the entire ED regime and associated taxes, aiming to provide relief to ordinary consumers and taxpayers, FTO findings further added.
The President’s decision to uphold the FTO’s directive underscores the imperative of addressing the unjust taxation burden on citizens.
It emphasizes the need for collaborative efforts among stakeholders to reformulate taxation policies, ensuring fairness and alleviating the financial strain on taxpayers.
Copyright Business Recorder, 2024
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