9 Hidden Charges That Are Costing Pakistani Consumers

Breaking Down Your Electricity Bill

Electricity bill charges in Pakistan are more than just a charge for the power you use. Consumers are burdened with a variety of taxes, surcharges, and fees that can make it challenging to understand the real cost of electricity. 

With recent hikes in power tariffs due to IMF agreements, consumers in Pakistan face the burden of nine distinct taxes and surcharges on their electricity bills. To check your bills and avoid late payment visit Checkmybill.pk and access all bills e.g., LESCO, MEPCO, IESCO at one place for free!

Caretaker Prime Minister Anwaarul Haq Kakar had to call an emergency meeting at the premier’s residence to address the growing unrest regarding high electricity bills.

As public outrage intensifies in response to reports of another significant pro-IMF increase in power tariffs, numerous individuals have turned to social media to highlight the various taxes the government collects via electricity bills.

Here are the 9 different taxes that are included in your electricity bills:

Taxes, duties, fees, and surcharges	Information
Electricity Duty	The Electricity Duty, a provincial charge, is applied to all consumers at a rate between 1% and 1.5% of variable charges.
Goods and Services Tax (GST)	GST is imposed under the Sale Tax Act 1990 on all consumers at 17% of the E/bill.
PTV License Charge	The PTV License fee is applied at Rs. 35 for domestic consumers and Rs. 60 for commercial consumers in the electricity bills.
Cost Surcharge for Financing	The Financing Cost Surcharge is applied at Rs. 0.43 per kWh and is relevant for all consumer categories, excluding lifeline domestic consumers.
Fuel Price Adjustment (FPA)	The FPA represents the variance between the actual fuel charges for a given month and the reference fuel charges component. If there is a positive change, the fuel price will be reflected in the consumer’s electricity bill. Conversely, in the event of a negative change, consumers will receive the benefits of the Fuel Price Adjustment (FPA) following NEPRA regulations.
Additional Tax	Additional Tax Additional Tax is applied to industrial and commercial consumers (not listed as active taxpayers with FBR) at rates ranging from 5% to 17% based on various bill amount tiers.
Further Tax	A further tax of 3% is applied to all consumers who do not possess a Sales Tax Return Number (STRN), with exceptions for domestic, agricultural, bulk consumers, and street light connections.
Tax on Earnings	Consumers are subject to income tax at different rates, which vary based on applicable tariffs and the total electricity bill.
Sales Tax	5% for commercial consumers on bills up to Rs. 20,000 and 7.5% on bills that exceed Rs. 20,000.

Why These 9 Hidden Taxes Are Being Added In Your Bill?

Here is the breakdown of 9 hidden charges in your electricity bill:

Electricity Duty

Electricity Duty is a provincial charge applied to all consumers, ranging from 1% to 1.5% of variable charges. For example, if your usage cost is Rs. 5,000, you might pay an additional Rs. 50 to Rs. 75 in Electricity Duty. This fee contributes to provincial revenue, but its impact on consumers is significant, especially for those with higher electricity usage.

Goods and Services Tax (GST)

The GST, applied under the Sale Tax Act 1990, is set at 17% of the total electricity bill. This means that if your bill is Rs. 10,000, you’ll pay an additional Rs. 1,700 as GST. It’s one of the biggest contributors to the overall bill amount and applies to all consumers.

PTV License Charge

The PTV License Charge is a fixed fee added to electricity bills for the maintenance of state-run television services. It costs Rs. 35 for domestic consumers and Rs. 60 for commercial consumers. While this amount may seem small, it adds up over time, especially for households on tight budgets.

Cost Surcharge for Financing

This surcharge is Rs. 0.43 per kWh and is meant to cover the financing cost of power projects. Excluding lifeline domestic consumers, all categories are subject to this surcharge, which can significantly increase the bill for high-usage consumers.

Fuel Price Adjustment (FPA)

The FPA reflects the difference between the actual fuel cost and the reference fuel cost. It can fluctuate monthly, either increasing or decreasing your bill. For instance, if fuel costs rise, consumers bear the brunt of the increase through higher FPA charges.

Additional Tax

This tax is levied on industrial and commercial consumers who are not active taxpayers with the FBR. Depending on the bill amount, it ranges from 5% to 17%. This encourages businesses to comply with tax regulations but adds another layer of cost to electricity expenses.

Further Tax

Applied at a rate of 3%, this tax targets consumers without a Sales Tax Return Number (STRN). Domestic, agricultural, bulk consumers, and street lights are exempt. For those affected, it’s an additional cost on top of already hefty bills.

Tax on Earnings

Income tax is applied based on the total electricity bill and applicable tariffs. It varies widely, making it one of the most unpredictable charges. For example, a consumer with a monthly bill of Rs. 50,000 might see significant income tax added to their total cost.

Sales Tax

Commercial consumers face a 5% sales tax on bills up to Rs. 20,000 and 7.5% on bills exceeding Rs. 20,000. This tax can be a considerable burden for small businesses, impacting their profitability and overall cost structure.

What Can You Do?

The recent hikes in electricity tariffs have led to widespread outrage. Social media platforms are flooded with posts from frustrated consumers who are struggling to pay their bills. Many have shared their electricity bills online, highlighting the disproportionate charges and questioning the government’s policies.

To manage your electricity costs, consider these steps:

1. Monitor Your Usage: Be mindful of how much electricity you consume, especially during peak hours.
2. Energy-Efficient Appliances: Invest in energy-efficient appliances to reduce your overall consumption.
3. Raise Your Concerns: Join local community groups or online forums to voice your concerns and demand transparency in electricity billing.
4. Stay Informed: Keep an eye on government policies and updates from NEPRA to understand upcoming changes in electricity tariffs and taxes.