KARACHI: Finance Minister Shaukat Tarin had earlier expressed that the government would not accept the condition of the International Monetary Fund (IMF) to further increase the electricity tariff. However, in the latest budget speech, the minister shifted the burden of withholding tax on the non-tax filers.
“Reduction in the threshold of monthly electricity bill for withholding tax on electricity consumption from Rs75,000 to Rs25,000 from domestic users not appearing on active taxpayers’ list,” the budget document said.
By the end of 2020, the total taxpayers number not more than three million out of a total population of 220 million, which means the government will now charge withholding tax (WHT) on electricity bill above Rs25,000 if the consumer is not appearing on active taxpayers’ list.
The federal government is already charging 17 per cent General Sales Tax (GST), Electricity Duty (ED) from all the consumer of electricity in Pakistan and now they will have to pay WHT on their Electricity Bill from July 1, 2021.
Presenting the Federal Budget 2021-22 in the National Assembly, Finance Minister Shaukat Tarin announced the removal of the ‘Withholding Tax’ on different things including banking transactions and cash withdrawals etc.
According to the analyst, “very few people are registered with the active taxpayer list of FBR.” However, the government did not mention how much it will charge WHT on Electricity Bills. The government is previously charging 15 per cent WHT from different sectors.
The analysts believed that if it is implemented on non-fillers after getting approval from the parliament the government would generate a huge amount from it compared to banking transactions and cash withdrawals etc.
The government of Pakistan Tehreek Insaaf (PTI) has been claiming that it has turned down the demand of the International Monetary Fund (IMF) to enhance the Electricity tariff in Pakistan, but on the other side, it imposed WHT on power consumers.
The consumers, who have a single-story house having an air-conditioner or have a load of above 5KW, received above Rs25,000 electricity bill in summer. If the consumer is not listed in the taxpayer’s list of FBR they would be charged WHT on the consumption of power.
The decision of the government would directly affect middle-class people in urban areas like Karachi, Lahore, Islamabad and other megacities.
Most people are already paying taxes through salaries, consumption of petrol, commodities and others things.