FTO directs FBR to ensure uniform tax treatment on net metering bills

The Federal Tax Ombudsman has directed the Federal Board of Revenue to ensure uniform tax treatment of sales tax and withholding tax on net metering electricity bills across the country.

The order was issued while disposing of a complaint alleging inconsistent taxation practices. The complainant stated that K-Electric was charging taxes on the gross billed amount, while distribution companies (DISCOs) in other regions were reportedly applying a different method, resulting in grievances among consumers.

The matter was reheard after being remanded by the President of Pakistan. All relevant stakeholders, including FBR, K-Electric and DISCOs, were given an opportunity to present their positions.

The Ombudsman observed that the proceedings did not require determination of tax liability or intervention in the regulatory framework of the National Electric Power Regulatory Authority. Instead, the issue stemmed from varying implementation practices in different jurisdictions, leading to uncertainty and repeated complaints from similarly placed consumers.

The FBR has been directed to address the matter at the policy and administrative level in consultation with stakeholders. The Board has also been asked to ensure that any clarification or instructions issued are communicated and implemented uniformly by all field formations to prevent inconsistent practices nationwide.

The Ombudsman reiterated that the office is not deciding tariff or regulatory policy matters, but has referred the issue for administrative resolution to ensure consistency and fairness in tax application.