Taxes on a MEPCO Bill
Last checked 26 September 2026
A MEPCO home bill can carry two taxes: general sales tax at 18% on the electricity charges, and income tax at 7.5% of the bill, which applies only when the consumer is not on FBR's Active Taxpayers List and the monthly bill is Rs 25,000 or more. The PTV fee has gone from bills since July 2025, but the provincial electricity duty of 1.5% is still charged. This guide shows which lines are taxes, how each is worked out, how to avoid the income tax and what extra taxes business connections carry.
Which lines on a MEPCO bill are taxes?
On a home bill, only the sales tax and income tax lines are taxes. The cost of electricity, fixed charges and the fuel and quarterly adjustments are tariff charges set by NEPRA. A surcharge notified by the federal government counts as part of the tariff, and the late payment surcharge is a penalty for paying late.
The table sorts the main lines on a MEPCO bill by what each one is, which law or body sets it, and who pays it.
| Bill line | What it is | Set by | Who pays |
|---|---|---|---|
| Cost of electricity and fixed charges | Tariff charges | NEPRA, uniform tariff notified by the government (MEPCO tariff 2026 unit rates) | Every consumer; lifeline homes pay no fixed charge |
| Fuel price adjustment (FPA) and quarterly adjustment (QTA) | Tariff adjustments | NEPRA (MEPCO fuel and quarterly adjustments) | All except lifeline and prepaid consumers |
| Debt servicing surcharge (also called the financing cost or FC surcharge) | Per-unit surcharge, treated as part of the tariff | Federal government, under section 31(8) of the NEPRA Act | Rs 3.23 a unit; Rs 0.43 for protected homes; lifeline homes do not pay it (NEPRA decision of 30 March 2023) |
| General sales tax (GST) | Federal tax | Sales Tax Act, 1990 | Every bill, at 18% |
| Income tax | Federal advance tax | Income Tax Ordinance, 2001, section 235 | Homes not on the ATL with bills of Rs 25,000 or more; commercial and industrial bills above Rs 500 |
| Further tax, extra tax, retailers' sales tax | Federal sales tax add-ons | Sales Tax Act and FBR notifications | Some commercial and industrial connections |
| Late payment surcharge | Penalty, not a tax | NEPRA tariff terms | Bills paid after the due date |
| Electricity duty (ED) | Provincial duty | Provincial government | Printed at 1.5% of the cost of electricity and fixed charges on 2026 bills |
| PTV fee | Former TV licence fee | Federal government | Zero or blank on bills since July 2025 |
How is sales tax worked out on a MEPCO bill?
Sales tax is 18% of the value of the electricity supplied before tax, which includes the cost of electricity, the fixed charge, the fuel and quarterly adjustments and the debt servicing surcharge. Section 3 of the Sales Tax Act, 1990 sets the 18% standard rate.
FBR's budget 2026-27 salient features list no change to the rate. For a distribution company such as MEPCO, the Act defines the value of supply as the total amount billed, including charges and duties but excluding the late payment surcharge and the sales tax itself, and PITC's notice on the fuel price adjustment confirms that sales tax applies to the FPA amount.
The worked example builds the main lines of a September 2026 bill for an un-protected home with 1 kW sanctioned load that used 300 units in both July and September. Each row is a bill line, with the working in the middle column; arrears are left out.
| Line | Working | Rs |
|---|---|---|
| Cost of electricity | 300 units × Rs 33.10 | 9,930.00 |
| Fixed charge | 1 kW × Rs 350 | 350.00 |
| Fuel price adjustment | 300 July units × Rs 2.0581 | 617.43 |
| Quarterly adjustment | 300 units × Rs 0.5194 | 155.82 |
| Electricity duty | 1.5% of Rs 10,280 (electricity and fixed charge) | 154.20 |
| Debt servicing surcharge | 300 units × Rs 3.23 | 969.00 |
| Charges before tax | Sum of the six lines | 12,176.45 |
| Sales tax | 18% of Rs 12,176.45 | 2,191.76 |
| Total with sales tax | Charges plus sales tax | 14,368.21 |
Sales tax here is about 22% of the energy cost alone, because it also falls on the fixed charge, the adjustments, the surcharge and the duty. A bill of this size stays far below Rs 25,000, so no income tax applies even if the consumer is not on the ATL. The MEPCO bill calculator with 18% sales tax works out any other bill the same way.
When does income tax appear on a MEPCO bill?
Income tax appears on a home bill only when the consumer is not on FBR's Active Taxpayers List (ATL) and the monthly bill is Rs 25,000 or more; it is then 7.5% of the bill.
This is advance tax under section 235 of the Income Tax Ordinance, 2001, charged by whoever prepares the bill in the same way as the electricity charges. The Ordinance exempts a domestic consumer whose name appears on the ATL, and it counts the bill including sales tax and all incidental charges. FBR's withholding tax rate card, updated to 30 June 2026 under the Finance Act 2026, gives these rates for homes:
| Home connection | Monthly bill | Income tax collected |
|---|---|---|
| Consumer on the ATL | Any amount | None |
| Consumer not on the ATL | Below Rs 25,000 | None |
| Consumer not on the ATL | Rs 25,000 or more | 7.5% of the bill |
The rate applies to the whole bill once it reaches the threshold: a non-ATL bill of Rs 25,000 carries Rs 1,875 of income tax, while a bill of Rs 24,999 carries none. Take an un-protected home with 4 kW sanctioned load that used 700 units in July and in September. Its September 2026 charges and sales tax come to Rs 43,117.41 (Rs 29,295 for energy, Rs 2,700 fixed charge, Rs 1,804.25 of adjustments, Rs 479.93 electricity duty, Rs 2,261 of debt servicing surcharge and Rs 6,577.23 sales tax). A consumer not on the ATL then pays Rs 3,233.81 more, a total of Rs 46,351.22; a consumer on the ATL pays nothing extra. Any other charge billed that month adds to the amount the 7.5% is worked out on.
What is the Active Taxpayers List?
The ATL is FBR's central record of online income tax return filers for the previous tax year. To check your status, send ATL, a space and your 13-digit CNIC number by SMS to 9966, or use the ATL status check on FBR's website.
Can the income tax be adjusted or refunded later?
A company can adjust all of it; anyone else can adjust only the tax collected on monthly bills over and above Rs 30,000. That is how section 235(4) stood on 20 February 2026: for a person other than a company, tax collected on bill amounts of up to Rs 360,000 a year is a minimum tax with no refund. Section 235(3) also stops the tax being collected from anyone who produces a Commissioner's certificate, for example that their income is exempt. FBR or a tax adviser can confirm how this applies to your own return.
What if you are on the ATL but still charged?
Raise it with MEPCO, with proof of your ATL status such as FBR's SMS reply. The exemption is for the domestic consumer whose name is on the list, so check whose name the connection is in: a bill still in a previous owner's name may need a change of name on the MEPCO connection. If the tax is not removed, follow the MEPCO wrong bill correction steps.
What taxes do shop, office and factory connections pay?
Commercial and industrial connections pay income tax on every bill above Rs 500, and sales tax add-ons when the holder is not registered for sales tax. Section 235 exempts only domestic consumers on the ATL, so business bills carry the income tax whether or not the holder files returns.
The income tax rates for these connections, from the same section 235 schedule and FBR rate card, depend on the gross monthly bill and do not rise for holders who are not on the ATL:
| Gross monthly bill | Income tax collected |
|---|---|
| Up to Rs 500 | None |
| Above Rs 500, up to Rs 20,000 | 10% of the bill |
| Above Rs 20,000, commercial | Rs 1,950 plus 12% of the amount above Rs 20,000 |
| Above Rs 20,000, industrial | Rs 1,950 plus 5% of the amount above Rs 20,000 |
Three sales tax add-ons can also appear on business bills:
- Further tax: 4% of the value of supplies to a person who is not registered for sales tax or not an active taxpayer, under section 3(1A) of the Sales Tax Act, except on supplies the government exempts by notification.
- Extra tax: an additional sales tax on electricity supplied to industrial and commercial connections whose holders are not registered for sales tax or not on FBR's Active Taxpayers List, set by S.R.O. 1222(I)/2021, where the commercial rate rises with the size of the monthly bill.
- Retailers' sales tax: retailers outside Tier-1 pay sales tax through their monthly electricity bill, 5% where the bill is up to Rs 20,000 and 7.5% above that, under section 3(9).
PITC's notice on the fuel price adjustment also lists extra tax and further tax as applying to industrial and commercial consumers. Registering for sales tax and filing returns keeps further tax and extra tax off a business bill; the retailers' tax depends on whether the shop is a Tier-1 retailer. Income tax registration is also a condition of the connection itself: section 181AA of the Income Tax Ordinance bars processing an application for a commercial or industrial connection unless the applicant is registered for income tax under section 181. The business unit rates themselves are in MEPCO commercial, industrial and tube-well rates.
What happened to the electricity duty and PTV fee?
The PTV fee has gone from MEPCO bills since July 2025, but the provincial electricity duty is still charged at 1.5%.
Profit reported on 29 June 2025 that Prime Minister Shehbaz Sharif announced the end of the PTV fee, and bills from July 2025 show the TV fee as zero or blank. ProPakistani reported on 1 July 2025 that Federal Energy Minister Awais Leghari asked the provinces to abolish the electricity duty, but 2026 MEPCO bills still print it at 1.5% of the cost of electricity and fixed charges. NEPRA's Consumer Service Manual describes it as a duty levied by the provincial government, so only the Punjab government can remove it.
How can you pay less tax on a MEPCO bill?
File your income tax return so your name reaches the ATL, and lower the charges that sales tax is worked out on. These steps cover homes and businesses:
- File your income tax return: a domestic consumer on the ATL pays no income tax on the electricity bill, however large it is.
- Check your ATL status by SMS to 9966 before the next bill is prepared.
- Cut the charges themselves: every Rs 100 less in electricity charges removes Rs 18 of sales tax. See practical ways to reduce a MEPCO bill.
- Register a shop or factory for sales tax and file its returns to keep further tax and extra tax off the bill.
To see the tax lines on your own bill, look up your latest MEPCO bill with the 14-digit reference number.
Sources: Sales Tax Act, 1990 as updated by FBR to 2025-26 (sections 2(46), 3(1), 3(1A) and 3(9)); FBR budget 2026-27 salient features; Income Tax Ordinance, 2001 as amended to 20 February 2026 (sections 181AA and 235, First Schedule Part IV Division IV, Tenth Schedule rule 10); FBR Withholding Income Tax Rate Card updated to 30 June 2026; FBR Active Taxpayer List pages; FBR S.R.O. 648(I)/2013 and S.R.O. 1222(I)/2021; NEPRA Consumer Service Manual (26 November 2025); PITC consumer awareness notice on the fuel price adjustment; NEPRA decisions of 11 February 2026 (tariff) and 4 September 2026 (adjustments); NEPRA decision of 6 March 2023 on surcharges under section 31(8) of the NEPRA Act; reports by ProPakistani (1 July 2025) and Profit (29 June 2025). Debt servicing surcharge: NEPRA decision of 30 March 2023 on the federal government's surcharge motion (rates by category, page 8); NEPRA decision of 7 September 2026 on use of system charges (paragraph 12); NEPRA decision of 9 December 2025 on the incremental consumption package (S.R.O. 2409(I)/2025); Sales Tax Act 1990, section 2(46)(i), FBR text updated to 2025-26. Checked 26 September 2026.