Electricity Bill Tax in Pakistan — Section 235 Rates

Almost everyone in Pakistan has looked at an electricity bill and wondered why it includes an income tax line. That line comes from Section 235 of the Income Tax Ordinance 2001, which collects advance income tax through electricity bills from certain categories of consumers. The rules are very different for domestic, commercial and industrial connections — and very different for filers and non-filers. This guide breaks down who actually pays this tax and at what rates.

Try the calculator: Estimate the tax on your own bill with our Electricity Bill Tax Calculator — Section 235.

What Is Section 235?

Section 235 requires electricity distribution companies to collect advance tax from specified consumers along with the monthly bill. It is not a sales tax and it is not a DISCO charge — it is income tax collected at source by the government, using the electricity bill as the collection point. For filers, the amount collected is generally adjustable in the annual return; for non-filers, it is usually just a cost, because they have no return in which to claim it.

Domestic Consumers — Mostly Protected

Households are treated gently. Under the published Section 235 rate card (Tax Year 2025-26 rates, carried on our calculator), a domestic monthly bill below Rs. 25,000 carries a 0% rate — no income tax is collected at all. Where a domestic bill reaches Rs. 25,000 or more, the relevant non-ATL category is charged at 7.5%. Ordinary domestic consumers who are filers are generally outside the charge. In plain terms: if your home bill is under Rs. 25,000, this tax should not appear; if it is above that and you are not on the ATL, expect the 7.5% collection.

Commercial and Industrial Consumers

Shops, offices and factories pay under a slab structure. Under the published rates: bills up to Rs. 500 carry a nil rate; bills above Rs. 500 and up to Rs. 20,000 are charged at 10%; and for bills above Rs. 20,000, commercial consumers pay Rs. 1,950 plus 12% of the amount exceeding Rs. 20,000, while industrial consumers pay Rs. 1,950 plus 5% of the amount exceeding Rs. 20,000. A quick example: a commercial bill of Rs. 10,000 falls in the 10% slab, so the tax is Rs. 1,000. A commercial bill of Rs. 50,000 would be Rs. 1,950 + 12% × Rs. 30,000 = Rs. 5,550.

Filer vs Non-Filer — Why Your Neighbour Pays Less

The single biggest factor after connection type is ATL status. Filers either fall outside most Section 235 categories or can adjust whatever is collected in their annual return. Non-filers both pay the higher categories and lose the money entirely. Combined with the cash withdrawal tax and higher property and vehicle withholding, this is another steady leak that makes staying off the ATL expensive. See our filer vs non-filer comparison for the full picture.

How to Check the Tax on Your Bill

Your bill itemises the charges; look for the income tax / advance tax line and compare it with the slab for your connection type and bill amount. If a domestic bill under Rs. 25,000 shows an income tax charge, or a filer is being charged in a non-filer category, contact your DISCO with your ATL evidence and ask for a correction — billing-category errors do happen, especially after a connection is transferred or a meter is changed. Keep the bills for the year; filers need them to claim the adjustment in the return.

Is Section 235 Tax Refundable?

For a filer, advance tax collected under Section 235 is adjustable against the final annual liability: if more was collected than your tax for the year, the excess is refundable or adjustable in the assessment. In practice this only works if you file a return and enter the amount — another reason the annual return matters even for people whose only "tax" is what appears on utility bills and bank statements. Our guide on how to file your income tax return walks through claiming these credits step by step.

Key Takeaways

Section 235 collects advance income tax through electricity bills; it is not a DISCO fee.
Domestic bills below Rs. 25,000/month: 0%. At Rs. 25,000 or more, the non-ATL category pays 7.5%.
Commercial/industrial: nil up to Rs. 500; 10% up to Rs. 20,000; above that Rs. 1,950 + 12% (commercial) or 5% (industrial) of the excess.
Filers can adjust the collection in their annual return; non-filers simply lose it.
Check your bill's tax line against your category — billing errors can be corrected with ATL proof.

Frequently Asked Questions

Why is income tax on my home electricity bill?

If your domestic bill is Rs. 25,000 or more and you are not on the ATL, Section 235 collection applies at 7.5% for that category. Below Rs. 25,000 the domestic rate is 0%.

I am a filer. Can I get this tax back?

It is adjustable: declare the amount in your annual return and it is credited against your final tax. Any excess over your liability is refundable through the assessment process.

Does Section 235 apply to solar/net-metering consumers?

The tax is charged on the bill under the same category rules; net-metering bills follow the same slab logic on the applicable amount. Check the tax line on your bill against your category and amount.

Where can I see all these withholding rates together?

Our Pakistan tax rates card 2026-27 summarises the major withholding taxes — electricity, cash withdrawal, property, vehicles and more — in one place.

Reading Your Bill — Advance Tax Is Not the Only Extra Line

An electricity bill carries several government levies that are often lumped together in conversation: GST on the supply, the fuel price adjustment (FPA), quarterly tariff adjustments, a small TV fee and financing-cost surcharges are DISCO or tariff items, while the Section 235 amount is specifically an advance income tax. When you compare your bill with a neighbour's, make sure you compare the income tax line only — the other lines depend on consumption and tariff category, not on your tax status. If the income tax line does not match the slab for your connection type and bill size, that is the line to dispute with the DISCO, with your ATL proof in hand if you are a filer.

Special Cases — Shops in Homes and Shared Meters

Mixed-use connections are where most disputes start. A shop run from a house on a domestic connection is billed under the connection's category, and a commercial activity can prompt the DISCO to reclassify the connection — with commercial slabs and Section 235 rates following. Shared meters in older multi-family buildings create the opposite problem: one large combined bill can cross the Rs. 25,000 domestic threshold even though each family's share is small. In both cases the practical remedy is the same: regularise the connection category with the DISCO, and where the bill genuinely aggregates several households, apply for separate meters so each unit is taxed under its own correct category.

Related Guides

Sources & review: The rates and rules in this guide are based on the Federal Board of Revenue (FBR), the Income Tax Ordinance 2001 and the amendments introduced through the Finance Act for 2026-27. File and verify your own return on FBR IRIS. This guide is for information only and is not professional tax advice. Last reviewed: October 2026.