LESCO(Lahore Electricity Supply Company) is the main energy supplier of Pakistan which is responsible for the distribution of electricity in Lahore and its surroundings.Apart from the price of energy they are required to pay various taxes and charges with LESCO which are included in their bill. It is also important for the energy sector regulatory framework to understand these charges as they have a significant impact on the overall electricity bill.

To carry out its duties, a state collects taxes from its citizens.

There are two types of taxes: Direct and Indirect. Direct taxes are collected directly from individuals in the form of income tax, wealth tax, and capital gains tax.

Indirect taxes are collected indirectly in the form of sales tax, consumption tax, customs duty, and service tax.

WAPDA is responsible for collecting various taxes and levies from its power users, some of which are mentioned below:

• FPA Fuel Price Adjustment
•  Quarterly Tariff Adjustments
• GST – General Sales Tax 
• AQTA Fixed Charges 
•  FC Surcharge
•  Electricity Duty
• GTS On FPA
• ED on FPA
• Income Tax 
• Further Tax
• Extra Tax 
• TV Fee 

Fuel Price Adjustment (FPA) is the difference between the actual fuel price and the reference fuel price. The difference is added to the electricity bill. In simple terms, it is an adjustment between the proposed fuel price for the current month and the actual fuel price for the current month. Like Pakistan, electricity is generated through thermal power generation using fuel oil and heavy fuel oil. Fluctuations in kerosene prices are common in Pakistan. Deductions are made every three months after the month.

 Quarterly Tariff Adjustments

The quarterly tariff adjustment is intended to offset financial pressures on electricity suppliers. The adjustment typically ranges from Rs 2.74 to Rs 2.75 per unit or kWh based on the change in the cost of generation. The adjustment is not applicable to residential consumers (less than 100 units per month) who are expected to be essential.

GST-General Sales Tax

The Sales Tax Act of 1990 imposes a 17% tax on all consumers on the entire bill. It is a complex tax that is levied on the final bill, which already includes all taxes. It is a progressive tax, meaning that the tax increases as the bill increases.

 Fixed Charges In Electricity Bill

In the Federal budget 2024 – 25, NEPRA has imposed additional charges on domestic electricity consumers, using more than 300 units per month. These fixed charges will be imposed from July 1, 2024. Fixed charges will be imposed as per the number of units consumed for residential / domestic consumers and for commercial users its will be applied as per the kWh.

Residential And Domestic Electricity Consumer

Consumed Units	Fixed Charges
Up to 300 Units	0 Rupees
301 to 400 Units	200 Rupees
401 to 500 Units	400 Rupees
501 to 600 Units	600 Rupees
601 to 700 Units	800 Rupees
701-Above	1000 Rupees

Residential electricity consumers using Time of Use (ToU) meters will also pay Rupees 1,000 fixed charges per month.

Commercial Electricity Consumer

Electricity Load	Fixed Charges
Load(Less Than 5KWh)	1000 Rupees
Load(More Than 5 KWh)	2000 Rupees

FC Surcharge

The FC surcharge is called the financing cost surcharge, which is Rs 0.43 per kWh per unit of electricity consumed by all categories of electricity consumers, whether industrial or residential, except for domestic essential consumers (less than 100 consumer units per month).

Electricity Duty

Another Important charge included in the electricity bill is the electricity tax,which is levied by the state government at varying rates from state to state.The purpose of this tax is to contribute to the development and maintenance of the energy sector ,ensuring stable power supply and energy infrastructure to improve.

Electricity taxes are taxes levied on all electricity consumers. They are variable fees (1% to 1.5%). Electricity taxes increase with the number of units consumed by an electricity consumer.

General Sale Taxes On FPA

GTS on Fuel Price Adjustment(FPA) is a specific component of electricity bills that can have a significant impact on the overall cost to consumers.To fully understand this,it is important  to break down the role of FPA and GTS in the structure of the bill.

How GTS on FPA:After adding FPA to the basic cost of electricity,GTS is calculated on the total amount including FPA.This basically means that the consumer pays the tax not only on the quantity of electricity but also on the fuel cost Adjustment.

General Sale Taxes Rate:The standard rate of GTS on electricity including FPA is generally around 17%.This percentage is applied to the entire bill,which includes the electricity charge and the base price of the FPA component.

Electricity duty on FPA

The Electricity tax is levied on the basic electricity traffic along with an equivalent portion of the FPA which means that tax like the GTS is calculated based on fluctuations in fuel prices.

Excise Duty (ED) on fuel price adjustment is 1% to 1.5% | It’s a variable amount chargeable on electricity bills.

Income Tax

Commercial electricity consumers are also subject to income tax which is calculated based on their electricity consumption.The tax is collected by the Federal Board of Revenue FBR through LESCO and is part of the government’s efforts to collect income tax from businesses and industries.

Consumers pay different fees depending on their rate plan and electricity tariff level. Not applicable to basic service customers and low tariff customers.

Further Tax

This tax applies to customers/consumers other than private households, agriculture, large consumers and street lighting operators who are not registered and have not filed a VAT return. A flat rate of 3% applies.

Extra Taxes

Industrial and commercial users who are not registered in the FBR’s Active Taxpayers List (ATL) are charged at rates ranging from 5% to 17% depending on various billing tiers.

TV Fee

It’s a fixed charge implemented on electricity consumers.

•  Domestic Consumer TV fee is Rupees 35/-
•  Commercial User TV fee is Rupees 60/-

Conclusion

Electricity bill is a serious problem in Pakistan and we all suffer from it. Electricity bill includes several taxes which are most burdensome for us. However, by following some of the above guidelines, we can minimize our electricity bill. By following the above instructions, we will save power for the country and save money for ourselves.