Solar users to pay GST on gross value of electricity

The Federal Tax Ombudsman (FTO) has directed eleven power distribution companies (Discos) to collect 18 per cent sales tax on the gross value of electricity supplied and rejected the current practice of net metering deductions. In his order on the complaint of a K-Electric consumer, the ombudsman has directed the Federal Board of Revenue (FBR) to implement the decision of sales tax collection on gross value of electricity generated through solar panels in the four provinces. According to the complainant, K-Electric was illegally charging sales tax on the gross value of electricity supplied to the consumer without considering the concept of net metering. On the contrary, all other Discos charge sales tax on net electricity units, i.e., the net of the KWh supplied by consumers with solar panels, against the KWh supplied by Discos.