The Federal Board of Revenue (FBR) suspended K-Electric’s sales tax registration on 20 May 2026, according to the taxpayer status portal maintained on the official website of FBR.
A spokesperson for K-Electric confirmed the development, stating the company has engaged the FBR directly and received assurances that the system status would soon be restored to normal.
Despite the suspension of its sales tax status, the income tax registration of K-Electric remains listed as “Active” on the FBR portal, indicating a partial rather than complete deregistration action.
Prominent Karachi-based Advocate Supreme Court and sales tax specialist Arshad Shehzad warned that the suspension could cause serious difficulties for millions of electricity consumers.
Shehzad explained that suspension powers under Section 21(2) of the Sales Tax Act 1990 were originally designed to combat fraudulent and bogus registrations misusing input tax credit mechanisms.
He argued that applying these emergency provisions against K-Electric a large utility with vast infrastructure and investment was not the intended purpose of the law.
Shehzad stated that millions of industrial units and commercial entities may now be unable to claim legitimate input tax adjustments on sales tax charged through their electricity bills.
He also warned that taxpayers seeking tax refunds based on K-Electric electricity bills could face difficulties claiming valid credits despite having settled their payments in full and on time.
Shehzad cautioned that affected consumers may face additional sales tax liabilities arising from the loss of legitimate input tax credits previously available through their electricity bill payments.
He noted that in practical terms, consumers could suffer greater financial consequences from the suspension than K-Electric itself, which continues to operate and bill customers as normal.
Clarifying a legal distinction, Shehzad explained that companies may become non-active due to non-filing, while suspension requires a formal order from a Commissioner and must be challenged before the Inland Revenue Tribunal.
He called on FBR to stop using Section 21 suspension powers against genuine taxpayers solely for revenue recovery, warning such actions harm industrial growth and export performance.
