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Besides the increasing inflation every day, the biggest issue for Pakistanis is the severe surge in electricity bills. The public is aware of the per unit cost of electricity, but very few know which taxes are being levied on the electricity bills.
The determination of electricity bills is based on the units of electricity consumed by the users, meaning the more units used, the more expensive the bill will be.
Additionally, a part of the electricity bill goes towards paying the company that provides electricity, while others are direct government revenues collected through bills from consumers.
Furthermore, there is also a ‘Fuel Price Adjustment’ that depends on the cost of producing electricity through means like coal, furnace oil, or gas. An estimate is made every month, and the amount is collected from the consumer after applying it.
The value of the rupee in this ‘adjustment’ is also significant, which is consistently decreasing.
Apart from the Fuel Price Adjustment, consumers are charged 43 paise per unit in the ‘Financing Cost Surcharge’ to reduce the circular debt.
Consumers in Karachi are informed that this amount is charged under the name of ‘PHL Holding’ on their electric bill.
Similarly, during ‘Quarterly (every 3 months) Tariff Adjustment’ or ‘DMC’, a further blow is struck on the consumers’ pockets when the government makes changes to the electricity rates.
There are more expenses or taxes that are directly collected by the government and are not directly associated with the company providing electricity. For instance, the highest tax on the electricity bill, an 18% General Sales Tax (GST), is collected under the GST.
It’s also important to note that if a consumer is not a tax filer, then income tax is imposed on their electricity bill as well.
It is clear that income tax is imposed on bills exceeding Rs. 25,000, which amounts to 7.5% of the total bill.”