Why is more tax charged on my shop's electricity bill if I am not on the Active Taxpayers List?

Many shopkeepers assume that anyone off the Active Taxpayers’ List pays double income tax on everything, including the electricity bill. For the income tax collected on a commercial electricity bill under section 235, the consolidated Ordinance says otherwise.

What does the law say?

Four provisions fit together here.

Section 235 makes the person preparing the electricity bill collect advance tax on the bill of a commercial, industrial or domestic consumer, at the rates in Division IV of Part IV of the First Schedule. The Explanation to section 235(2) says the bill means the bill “inclusive of sales tax and all incidental charges”.

Section 100BA says the collection or deduction of advance tax from a person not appearing on the active taxpayers’ list “shall be determined in accordance with the rules in the Tenth Schedule”, and that the Tenth Schedule overrides anything contrary in the Ordinance.

Rule 1 of the Tenth Schedule says that where tax is to be deducted or collected under any provision of the Ordinance from a person not on the list, “the rate of tax required to be deducted or collected, as the case may be, shall be increased by hundred percent of the rate” specified in the Ordinance. Read alone, this would double the section 235 rate.

Rule 10 of the Tenth Schedule then says the provisions of the Schedule do not apply to the tax collectible or deductible under the sections it lists. Clause (i) of that list reads “tax deducted under section 235”. It carries no footnote showing it was omitted, so it is part of the law as amended to 30 June 2026.

The result: the non-ATL increase in rule 1 does not reach the section 235 charge on a shop’s bill.

How does it work in practice?

The electricity company works out section 235 tax on a commercial bill using the Division IV table, whatever the owner’s filing status. For tax year 2027 the table reads:

Gross amount of bill	Tax
Up to Rs. 500	Rs. 0
Exceeds Rs. 500 but does not exceed Rs. 20,000	10% of the amount
Exceeds Rs. 20,000	Rs. 1,950 plus 12% of the amount exceeding Rs. 20,000 (commercial consumers)

Getting onto the list does not take a shop out of section 235 either. The proviso to section 235(1) removes the charge only for “a domestic consumer of electricity” whose name is on the list. A commercial connection is not covered by that proviso.

The list itself comes from section 181A, which gives the Board the power to institute the active taxpayers’ list and says it “shall be regulated as may be prescribed”. The rules that set who goes on the list are in the Income Tax Rules, 2002, which this corpus holds only as amended to 24 November 2023.

Worked example (illustrative figures)

Two cloth shops sit side by side in Anarkali, Lahore. Asif is on the Active Taxpayers’ List. Bilal is not. In August 2026 each receives a commercial bill of Rs. 30,000, inclusive of sales tax and charges.

1. Both bills exceed Rs. 20,000, so the third row applies.
2. Amount above Rs. 20,000: Rs. 30,000 minus Rs. 20,000 = Rs. 10,000.
3. 12% of Rs. 10,000 = Rs. 1,200.
4. Section 235 tax = Rs. 1,950 plus Rs. 1,200 = Rs. 3,150.
5. Rule 10(i) keeps the Tenth Schedule out, so Bilal’s section 235 tax is also Rs. 3,150.

If Bilal’s bill still shows more tax than Asif’s, the difference is not explained by section 235 and rule 1 of the Tenth Schedule.

What else could make a non-filer’s bill higher?

The Ordinance does not answer this directly, but the corpus points to places to look.

• Sales tax further tax. Section 3(1A) of the Sales Tax Act, 1990 charges a further tax of four percent where taxable supplies are made to a person who has not obtained a sales tax registration number or who is not an active taxpayer. “Active taxpayer” there is a sales tax concept defined in section 2(1A) of that Act, not the income tax list. The subsection is subject to section 8(6) and to notifications excluding particular supplies, and those notifications are not in this corpus.
• Sales tax on retailers through the bill. Section 3(9) of the Sales Tax Act charges retailers other than Tier-1 retailers through their monthly bills at five percent where the bill does not exceed Rs. 20,000 and seven and a half percent above that. This depends on being a non-Tier-1 retailer, not on income tax filing status.
• Section 99A. Tax on commercial connections of retailers other than Tier-1 retailers can be set by an income tax general order under section 99A. Section 99A(4) says section 100BA and rule 1 of the Tenth Schedule do not apply to that tax unless the order provides for it. The order is not held in this corpus.

What if I am off the list for other purchases?

Rule 10 carves out only the sections it names. Other tax collected from a shopkeeper who is not on the list can still be increased. For example, the Table in rule 1 of the Tenth Schedule sets 2.5% for tax under section 236H on purchases from distributors and wholesalers, against 0.5% in Division XV for listed persons.

Common mistakes

• Assuming every withholding doubles for non-filers. Rule 1 is general, but rule 10 excludes listed sections, and section 235 is one of them.
• Expecting the list to remove tax from a shop bill. The section 235(1) proviso covers domestic consumers only.
• Mixing up the two lists. The income tax list under section 181A and the sales tax “active taxpayer” status under the Sales Tax Act are separate, and each has its own consequences.

What to check in the official text

Read section 235, section 100BA and section 181A of the Income Tax Ordinance as amended to 30 June 2026, Division IV of Part IV of the First Schedule, and rules 1 and 10 of the Tenth Schedule. For the sales tax side, read section 3(1A), section 3(9) and section 2(1A) of the Sales Tax Act, 1990 as amended to 30 June 2026. Any notification under section 3(1A) or general order under section 99A that applies to your connection needs to be read separately, as this corpus does not hold them.