Tax Return 2026 Tax on FESCO Electricity Bill and How to Declare It in Your Income Tax Return
If you pay income tax on your electricity bill, it is important to know how that tax should be declared in your Pakistan income tax return. Electricity companies such as FESCO collect advance income tax from certain electricity consumers under Section 235 of the Income Tax Ordinance, 2001.
Many taxpayers pay this tax every month through their electricity bills but do not know where to declare it when filing their annual income tax return. The same applies to the electricity expense itself, which may need to be reported separately depending on whether the electricity connection is being used for business or personal purposes.
This guide explains the applicable electricity tax rates, how to calculate the amount, where to declare the tax in FBR IRIS, and how to report your annual electricity expense in your income tax return or wealth statement.
Tax on Electricity Bills Under Section 235
Section 235 of the Income Tax Ordinance, 2001 deals with advance income tax collected on electricity consumption. The applicable treatment depends on the type of electricity connection and, in the case of domestic consumers, whether the consumer appears on the Active Taxpayer List (ATL).
For Tax Year 2026, the commonly applicable rates for commercial, industrial, and domestic electricity consumption are as follows:
| Electricity Consumer | Monthly Bill Amount | Advance Income Tax |
|---|---|---|
| Commercial / Industrial | Up to Rs. 500 | Nil |
| Commercial / Industrial | More than Rs. 500 up to Rs. 20,000 | 10% of the bill amount |
| Commercial | More than Rs. 20,000 | Rs. 1,950 + 12% of amount exceeding Rs. 20,000 |
| Industrial | More than Rs. 20,000 | Rs. 1,950 + 5% of amount exceeding Rs. 20,000 |
| Domestic — ATL / Filer | Rs. 25,000 or more | 0% |
| Domestic — Non-ATL / Non-Filer | Less than Rs. 25,000 | 0% |
| Domestic — Non-ATL / Non-Filer | Rs. 25,000 or more | 7.5% of the bill |
These rates are based on the Section 235 electricity-consumption provisions applicable for Tax Year 2026. Commercial and industrial consumers have the same basic rate structure up to Rs. 20,000, while different rates apply above that threshold. For domestic consumers, the 7.5% advance income tax applies to non-ATL consumers when the monthly bill reaches the applicable Rs. 25,000 threshold.
Commercial Electricity Bill Tax
If you have a commercial electricity connection, Section 235 applies according to the gross amount of the monthly bill.
A commercial bill of up to Rs. 500 carries no tax under this provision. When the bill exceeds Rs. 500 but does not exceed Rs. 20,000, the tax is calculated at 10% of the bill amount.
For a commercial bill above Rs. 20,000, the calculation changes to a fixed amount of Rs. 1,950 plus 12% of the amount exceeding Rs. 20,000.
For example, if a commercial electricity bill is Rs. 50,000, the calculation for the Section 235 amount would be based on the Rs. 1,950 fixed component plus 12% of the amount above Rs. 20,000.
The amount actually appearing on your electricity bill should be used when preparing your annual tax records.
Industrial Electricity Bill Tax
Industrial consumers have a different rate once the monthly electricity bill exceeds Rs. 20,000.
For an industrial connection, the applicable calculation is Rs. 1,950 plus 5% of the amount exceeding Rs. 20,000.
Therefore, industrial and commercial consumers should keep their electricity bills separately classified because the applicable rate above Rs. 20,000 is different.
Domestic Electricity Bill Tax for Filers and Non-Filers
Domestic electricity consumers are treated differently from commercial and industrial consumers.
If a domestic consumer is on the Active Taxpayers List (ATL), the Section 235 advance income tax on domestic electricity consumption is generally not collected.
For a domestic consumer who is not appearing on the ATL, no Section 235 tax applies where the monthly bill is below Rs. 25,000. When the monthly bill reaches Rs. 25,000 or more, the applicable advance income tax is 7.5% of the bill amount.
This is one reason why maintaining active filer status can make a significant difference for domestic consumers with higher electricity bills.
Collect Your Electricity Bills for the Complete Tax Year
Before declaring electricity tax in your income tax return, collect all electricity bills for the relevant tax year.
For a July-to-June period, maintain a record of your bills from July through June. You can use an Excel spreadsheet, accounting software, or even a simple written record.
Your record should include:
| Information | What to Record |
|---|---|
| Billing Month | July, August, September, etc. |
| Electricity Company | FESCO, LESCO, MEPCO, GEPCO, IESCO, etc. |
| Reference Number | Your electricity bill reference number |
| Total Bill | Gross amount of the monthly bill |
| Income Tax Deducted | Section 235 amount shown on the bill |
| Annual Total | Total electricity expense for the year |
Keeping this information together makes it much easier to complete your tax return and verify the amounts entered into IRIS.
You should also retain your original electricity bills and supporting records. FBR states that taxpayers with taxable income are required to keep income tax records for six years.
How to Declare Electricity Tax in FBR IRIS
The electricity tax collected under Section 235 is reported separately from the electricity expense itself.
FBR’s IRIS is the online system used for filing income tax returns in Pakistan. FBR explains that taxpayers complete the Return of Income and Wealth Statement through IRIS.
When preparing your return, go to the relevant section for Tax Chargeable on Payments / Adjustable Taxes and locate the entry for Section 235 — Electricity Consumption.
Depending on the current IRIS interface and your return type, the exact wording or placement of fields may change. The important point is to report the eligible tax collected from your electricity bills under the appropriate Section 235 entry.
The information may include details such as:
- Total electricity bill amount
- Electricity reference number
- Electricity company
- Tax collected or deducted
- Relevant tax period
Make sure the figures match your electricity bills and available tax records.
Example of Declaring Electricity Tax
Suppose your electricity bills during the relevant period have a combined value of Rs. 500,000 and the eligible Section 235 tax deducted from those bills totals Rs. 37,500.
You should maintain records showing:
| Description | Amount |
|---|---|
| Total electricity bills | Rs. 500,000 |
| Section 235 tax deducted | Rs. 37,500 |
| Electricity company | FESCO / relevant provider |
| Reference number | As shown on your bill |
The Rs. 500,000 represents the electricity expense, while Rs. 37,500 represents the tax collected through the electricity bills. These amounts have different purposes in the tax return and should not simply be entered as one figure.
How to Declare Electricity Expense for a Business
If you are a business owner and the electricity bill relates to your business, the annual electricity expense should be reported under the appropriate business expense category in your income tax return.
In the business section, look for the relevant administrative or operating expense category containing Electricity, Water and Gas.
If you have electricity, water, and gas expenses, you should maintain proper records for each expense and enter them according to the appropriate fields available in the return.
For example, if your business incurred Rs. 500,000 in electricity expenses during the year, that annual amount should be recorded as an eligible business expense under the appropriate category, subject to the applicable tax rules.
The expense entry and the Section 235 tax entry serve different purposes. The expense represents the cost of operating the business, while the Section 235 amount represents tax already collected through the electricity bill.
How Salaried Persons and Freelancers Declare Electricity Expenses
If you are a salaried individual, freelancer, or another taxpayer who does not claim the electricity bill as a business expense, the treatment is different.
Personal electricity expenditure is generally reported through the relevant Personal Expenses section of the Wealth Statement where applicable.
For example, if your total personal electricity expenditure for the year is Rs. 500,000, you can record the annual amount under the appropriate electricity-related personal expense field in your Wealth Statement.
FBR confirms that an online income tax filing involves both the Return of Income and the Wealth Statement, and the Wealth Statement must reconcile with the taxpayer’s income and expenses.
This distinction is important:
| Taxpayer Situation | Where the Electricity Expense Is Generally Reported |
|---|---|
| Business owner | Relevant business expense section |
| Salaried individual | Personal Expenses in Wealth Statement |
| Freelancer | Depends on whether the expense is business-related or personal |
| Other individual taxpayer | Appropriate personal or business category based on actual use |
Do not claim a personal electricity expense as a business expense merely to reduce taxable income. The category should reflect the actual use and nature of the expense.
Is Tax Paid on an Electricity Bill Refundable?
The tax collected under Section 235 should not simply be assumed to be a direct cash refund.
Where the amount is treated as adjustable tax under the applicable provisions, it can be credited against the taxpayer’s final income tax liability.
For example, suppose your calculated annual tax liability is Rs. 200,000 and you have Rs. 37,500 of eligible adjustable tax already collected through electricity bills.
The eligible Rs. 37,500 can reduce the remaining tax liability, subject to the applicable rules and your taxpayer status.
In simple terms:
Final Tax Liability − Eligible Adjustable Tax = Remaining Tax Payable
Therefore, if you have paid eligible advance income tax through your electricity bills, it is important to declare it correctly in your annual income tax return rather than ignoring it.
FBR explains that withholding taxes can have different treatments: some are treated as final tax while others are adjustable against the taxpayer’s final tax liability.
Electricity Bill Tax and FESCO Consumers
FESCO consumers should follow the same basic Section 235 framework applicable to electricity consumption.
When preparing your FESCO income tax records, keep your monthly FESCO bills together and record the Reference Number, gross bill amount, and Section 235 tax amount.
If you also have electricity connections from another distribution company during the year, keep those records separately as well. The key requirement is to accurately report the actual amounts collected and the applicable electricity expense.
Official FBR Resources for Income Tax Return Filing
The official Federal Board of Revenue website provides the main resources required for income tax registration, return filing, IRIS access, tax rates, and related information.
| Purpose | Official Resource |
|---|---|
| FBR Official Website | Federal Board of Revenue (FBR) |
| File Income Tax Return | FBR — File Income Tax Return |
| IRIS Online Filing | FBR IRIS / Online Income Tax Filing Information |
| Income Tax Ordinance, 2001 | FBR — Income Tax Ordinance, 2001 |
| Income Tax Registration | FBR — Register for Income Tax |
| FBR Withholding Tax Information | FBR — Directorate General of Withholding Taxes |
FBR’s current Income Tax Ordinance page provides amended versions of the Income Tax Ordinance, including the version amended through 30 June 2026, making it an important official reference when checking the law applicable to Tax Year 2026.
Important Points Before Filing Your Tax Return
Before submitting your Tax Return 2026, make sure that:
- You have collected your electricity bills for the relevant tax year.
- Your FESCO or other electricity Reference Number is recorded correctly.
- The total electricity expense agrees with your records.
- The Section 235 tax amount agrees with the tax shown on your bills.
- Business electricity expenses are reported under the appropriate business expense category.
- Personal electricity expenses are reported appropriately in the Wealth Statement.
- Adjustable tax is entered under the correct Section 235 category.
- Your Return of Income and Wealth Statement reconcile properly.
- You keep your electricity bills and supporting records for future reference.
FBR states that successful submission of the Income Tax Return and Wealth Statement in IRIS is confirmed when both forms move from the Draft folder to Completed Task.
Final Thoughts
Tax collected through your electricity bill is an important part of your annual tax records. Whether you are a FESCO domestic consumer, commercial consumer, industrial consumer, salaried person, freelancer, or business owner, the correct treatment depends on the nature of your electricity connection and how the expense is being used.
The most important thing is to keep your monthly electricity bills, calculate your annual electricity expense, identify the Section 235 tax collected, and report each amount in the appropriate place in your income tax return.
For Tax Year 2026, taxpayers should also verify the latest FBR rules and the current IRIS fields before submitting their return, because tax rates, thresholds, forms, and filing procedures can be amended through legislation or official notifications.
