FESCO Taxes and Duties
Money is a key factor in running a government, it helps in performing its functions. Govt raises funds by imposing taxes on the masses. The taxes are of two types i.e. direct taxes and indirect taxes.
Direct taxes are imposed on persons directly via income tax, wealth tax, capital gain tax etc. Indirect taxes are imposed on persons indirectly in the form of sales tax, duties and services or professional taxes.
Indirect taxes are the main source of income for the government, these are collected through electricity bills, gas bills, and taxes on the sale of products and services. In this article, we will cover taxes and duties included in the FESCO Bill. It will help you to understand your FESCO Bill easily and you will be able to know the price of electricity and taxes.
Here is a list and details of taxes and duties included in your bill.
Electricity Duty
Electricity duty is imposed by the provincial government on electricity bills. It is imposed at the rate of 1% to 1.5%. It increases with the increase in the consumption of electricity. It is calculated at the price of electricity, which means as our consumed units increase the electricity duty will also increase accordingly.
General Sales Tax
Federal govt has imposed a general sales tax on the entire amount of the bill of all consumers under the Sales Tax Act of 1990 at the rate of 17%. It is calculated after adding or charging all other taxes, which means it is imposed on the net amount of the bill. It increases with the increase in your bill.
PTV License Fee
The federal govt has imposed a fixed monthly fee of PTV in electricity bills at the rate of Rs35/- for domestic consumers and Rs60/- for commercial consumers. As it is a fixed tax or fee, it remains constant for any amount of bill.
Financing Cost Surcharge ( FC Surcharge )
It is charged at the rate of Rs 0.43/- per unit (kilowatt hour ) to all categories except lifeline users. It is a progressive tax, which means its amount increases with the increase in consumption.
Fuel Price Adjustment ( FPA )
It is a very important tax imposed on electricity bills. It affects all consumers. It is imposed on the consumption of electricity of the previous month as compared to all other taxes imposed on the current month’s consumption.
Its results are added in the current month’s bill which results in the suffering of the consumer. You can now calculate your Bill online before you get your hard copy of the bill, to calculate open Bill Calculator.
In our country thermal power has a major share in the production of electricity. Fossil fuels like furnace oil, coal and gas are mostly used in the production of electricity by thermal power plants.
We import these from other countries and their prices are not stable, they go on changing day by day. The difference in the price of these products is shifted to the consumers in the form of FPA in electricity bills.
We can understand it with an example of the supposed price for fossil fuels. We suppose that the price of furnace oil was set at $70 for August, but the actual price was $80 for that month. The difference of $10 will be adjusted in the bills for the upcoming month. This adjustment is called Fuel Price Adjustment.
If the price decreases from its set price then this price is deducted from the current month’s bill. Click to learn about how to Pay Bills and get all the required information.
In short, we can say that the FPA can be added or subtracted for any month based on the change in the price of fossil fuels.
This adjustment is made every 3 months and is called a quarterly tariff adjustment.
Extra Tax
It is charged to commercial and industrial consumers only at the rate of 5% to 17% for different bill slabs. It is imposed only on those consumers who are not on the Active Tax Payer List ( ATL ) of FBR
Further Tax
It is charged at the rate of 3% to consumers who have no Sales Tax Return Number ( STRN ). However, it is not imposed on domestic, agriculture, bulk users and street light connections.
Income Tax
Income tax is applied to consumers at different rates, which vary depending on the applicable tariff and the total amount of their electricity bill. It is not imposed on all consumers.
Sales Tax
It is a special tax for commercial consumers only, it is charged at a fixed rate of 5% for bills amounting to Rs 20000/- and a rate of 7.5% for bills of amount more than Rs 20000/-
You can read about these taxes at the official site of the Ministry of Power.
Fixed Charges
In the Federal Budget for the financial year of 2024-25, NEPRA has imposed a fixed tax on domestic and commercial consumers. Domestic consumers who consume more than 300 units in a month will be charged a fixed tax. Its rate is different for different bill slabs.
We enlist its rate for different slabs
| Units Consumed / Per Month | Fixed Charges (Rupees) |
| Up to 300 Units | 0 Rupees |
| 301 – 400 Units | 200 Rupees |
| 401 – 500 Units | 400 Rupees |
| 501 – 600 Units | 600 Rupees |
| 601 – 700 Units | 800 Rupees |
| 701 – Above | 1000 Rupees |
The commercial consumers are charged according to this table
| Electricity Load | Fixed Charges (Rupees) |
| Load (less than 5 kWh) | 1,000 Rupees |
| Load (More than 5 kWh) | 2,000 Rupees |
How to Minimize FESCO Taxes and Duties?
Electricity prices are high and increasing day by day, so consumers suffer a lot. We can not lower the prices of electricity ourselves. But we can lower our bills sufficiently. As electricity bill has many taxes and duties included, most of them are progressive (increase with the increase in consumption ). We can lower these taxes with a decrease in the consumption of electricity and remain in a lower bill slab.
Here we will enlist some remedies to lower taxes in your bills and ultimately your bills will be lowered. But if you think that you are charged more units than you consumed during a month, then you can complain to FESCO. To get information and procedure visit Complaints.
Stay in Protected Consumers
Govt gives subsidies to protected consumers, they enjoy a very low rate of electricity as compared to non-protected consumers. These consumers are free from some taxes. So try to stay in the protected category of consumers. If you want to apply for a new electricity connection then visit New Connection to get all the required information.
Stay in a Lower Bill Slab
Govt has designed bill slabs to charge high from consumers with higher usage of electricity. So we should try to stay in a lower bill slab, it will save us from higher taxes and rates of electricity.
To know about your consumed units before you receive your bill, get register yourself with an FESCO SMS Subscription.
Use Energy Efficient Appliances
We use old appliances and these are not energy efficient. These consume more energy as compared to new and modern energy-efficient appliances. So we should replace our old appliances with new, modern and energy-efficient appliances. It will lower the consumption of electricity and result in lower electricity bills
Use Daylight
We should utilise maximum daylight in our daily lives. We should try not to use lights during the time in our rooms. Dry washed clothes in sunlight and avoid using drayer for this purpose.
Solar Energy
We should install a solar system in our homes, whether it is of lower capacity. We should use as much solar energy as we can afford. We should invest in solar system installation as it can lost longer and return for more years. We can not only use our produced electricity but we can also export it to the national grid and earn money. For this purpose, a Green Meter is used.
Register in FBR
Consumers should register themselves with FBR ( Federal Board of Revenue ) and get NTN. It will help them to avoid income tax on their utility bills.
Commercial and industrial consumers should get NTN and keep themselves on active taxpayer lists to avoid an extra tax at the rate of 5% to 17%.
To avoid a 3% tax ( Further Tax ), the consumers should get STRN.
Registering with FBR will relieve us of many taxes and lower our bills.
Conclusion
In Pakistan the prices of electricity are high and some taxes are also included in them. The taxes and duties increase the burden on consumers. So, we should plan our usage according to our needs and lower our bills.
We should follow the given steps to decrease our bills and taxes in them.
