Can I adjust or get a refund of the income tax collected on my shop's electricity bill?

What does the law say?

Section 235(4) of the Income Tax Ordinance, 2001 splits the advance tax collected on electricity bills into parts that behave differently:

Who	Part of the tax	How it is treated
Taxpayer other than a company	Tax collected up to a bill amount of Rs. 360,000 per annum	Minimum tax on income, no refund (section 235(4)(a))
Taxpayer other than a company	Tax collected on a monthly bill over and above Rs. 30,000 per month	Adjustable (section 235(4)(b))
Company	All tax collected	Adjustable against tax liability (section 235(4)(c))

A sole-proprietor shop or a partnership running as an association of persons is “a taxpayer other than a company”, so the first two rows apply.

“Adjustable” tax works through section 168. Tax collected under Chapter XII of the Ordinance, which includes section 235, is treated as tax paid by the person it was collected from, and that person gets a tax credit for it in the tax year of collection. Section 235 is not in the list of final taxes in section 168(3). Section 168(5) refunds any credit that cannot be used in the year.

“Minimum tax” is different. Section 235(4)(a) says that part “shall be treated as minimum tax on the income of such persons and no refund shall be allowed”. Section 235 does not set out the mechanics, but the plain effect of those words is that the shopkeeper’s tax for the year cannot be brought below that amount by this route, and whatever part of it exceeds the tax actually due on the shop’s income is not paid back.

How is the tax calculated in the first place?

For commercial consumers, Division IV of Part IV of the First Schedule (as amended to 30 June 2026, so applying in tax year 2027) sets nil on a gross bill up to Rs. 500, 10 percent of the bill above Rs. 500 up to Rs. 20,000, and Rs. 1,950 plus 12 percent of the amount exceeding Rs. 20,000 for larger bills. The related page on income tax on shop electricity bills explains the table and the higher rate for people not on the Active Taxpayers’ List.

Worked example (illustrative figures)

Two shopkeepers in Peshawar, both individuals on the Active Taxpayers’ List, each with the same bill every month of tax year 2027.

Tariq’s grocery: gross bill Rs. 25,000 a month.

1. Monthly tax: Rs. 1,950 + 12% of (Rs. 25,000 - Rs. 20,000) = Rs. 1,950 + Rs. 600 = Rs. 2,550.
2. Yearly tax: Rs. 2,550 x 12 = Rs. 30,600.
3. Yearly bills: Rs. 25,000 x 12 = Rs. 300,000, within the Rs. 360,000 limit, and no month is above Rs. 30,000.
4. Result: all Rs. 30,600 is minimum tax under section 235(4)(a). None of it is refundable.

Nadia’s garment shop: gross bill Rs. 45,000 a month.

1. Monthly tax: Rs. 1,950 + 12% of (Rs. 45,000 - Rs. 20,000) = Rs. 1,950 + Rs. 3,000 = Rs. 4,950.
2. Yearly tax: Rs. 4,950 x 12 = Rs. 59,400. Yearly bills: Rs. 540,000.

Section 235(4) does not say how to divide the tax on a bill that is partly within and partly above the limits. Rs. 30,000 a month for twelve months equals Rs. 360,000, so one way to read clauses (a) and (b) together is to treat the tax on the first Rs. 30,000 of each monthly bill as minimum tax and the rest as adjustable:

3. Tax on a Rs. 30,000 bill: Rs. 1,950 + 12% of Rs. 10,000 = Rs. 3,150 a month, or Rs. 37,800 a year: minimum tax.
4. The rest: Rs. 4,950 - Rs. 3,150 = Rs. 1,800 a month, or Rs. 21,600 a year: adjustable.
5. Check: Rs. 37,800 + Rs. 21,600 = Rs. 59,400.

Another reading of clause (b), that the whole tax on any monthly bill above Rs. 30,000 is adjustable, would treat all Rs. 59,400 as adjustable. The Ordinance does not settle which reading is correct, and bills that vary from month to month make the question harder. The split above is shown only to make the arithmetic visible, not as the settled answer.

What if the certificate route applies?

Section 235(3) stops the collection altogether for a person who produces a certificate from the Commissioner that his income for the tax year is exempt from tax, or that he has discharged his advance tax liability, or whose entire income is subject to the final tax regime or minimum tax regime under any provision of the Ordinance other than section 235. The section does not set out the application procedure; that is outside the text.

What if the shop is run by a company?

Section 235(4)(c) makes all the tax collected from a company adjustable against its tax liability. The Rs. 360,000 and Rs. 30,000 figures do not apply to it.

Common mistakes

• Expecting a refund of all electricity bill tax at year end. Section 235(4)(a) bars a refund of the minimum-tax part for non-company taxpayers.
• Assuming every bill above Rs. 30,000 is fully adjustable without question. As the example shows, the text does not settle how the split works.
• Forgetting the credit exists. The adjustable part is tax paid under section 168 and can be set against the tax due for the same tax year.
• Confusing this with sales tax on the bill. Sales tax charged to small retailers through the electricity bill is a Sales Tax Act levy and has nothing to do with this income tax credit.

What to check in the official text

Read section 235(3) and (4), section 168(1) to (5), and Division IV of Part IV of the First Schedule. Section 235(4)(a) was amended to its current Rs. 360,000 per annum wording by later Finance Acts, so confirm you are reading the edition for the right tax year.