Islamabad, May 12, 2025 – In a significant move aimed at safeguarding consumers from excessive taxation, the Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to constitute a joint committee to re-evaluate the entire regime of electricity duty and taxes calculated thereon. The committee will include representatives from the Regional Tax Office (RTO) Peshawar, Peshawar Electric Supply Company (PESCO), and the Khyber Pakhtunkhwa Energy Department. This development comes after the FTO took suo motu notice of complaints regarding the unlawful collection of taxes by distribution companies (DISCOs) under section 235 of the Income Tax Ordinance, 2001. The FTO noted FBR’s indifference to the matter and emphasized the need to provide relief to ordinary consumers and taxpayers who have been subjected to undue financial burden in the name of electricity-related charges. The complaint, which triggered the inquiry, was filed by a PESCO consumer, Israruddin, who contested the imposition of various taxes on his electricity bill for August 2023. Claiming financial hardship, he appealed for an exemption from income tax and associated levies. Upon investigation, the FTO observed serious discrepancies. Deputy Commissioner Inland Revenue (DCIR) Usman Asif defended the FBR’s position, stating that income tax had not been applied on bills below Rs. 25,000 and that GST was charged according to law. However, the complainant’s authorized representative, Zulfiqar Ali of Rafaqat Babar & Co, could not provide adequate justification for the inclusion of electricity duty (ED) in the bill. The inquiry revealed that ED is being levied across all consumer categories by DISCOs under the outdated West Pakistan Finance Act, 1964, now renamed the Punjab Finance Act, alongside Article 157(2)(b) of the Constitution. This law dates back to the “One Unit” era when provinces were empowered to raise funds for power generation by imposing a duty on consumed electricity units. However, following the NEPRA Act of 1997 and restructuring…