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FTO Directs FBR to Investigate Illegal Collection of Electricity Duty from Consumers

The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to investigate illegal collection of Electricity Duty (ED) from electricity consumers.

In this regard, FTO has directed the 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 ordinary consumers and taxpayers.

FTO order aid that the 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.

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, GAPCO, operating in 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 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 a common consumer is 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.

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.

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