Electricity Bills at 800 kWh and Below Are Free of Service Tax Until Year End

Customs has issued Service Tax Policy No. 6/2026, dated 1 October 2026, on a service tax exemption for electricity transmission and distribution services supplied to domestic users.

Electricity transmission and distribution services to domestic users, other than domestic users in designated areas, have been a taxable service since 6 September 2018. Under the new policy, the Minister of Finance has agreed to exempt part of this service from service tax.

Domestic users whose electricity usage is 800 kWh and below, for a minimum period of 28 days in one billing cycle, are exempted from paying service tax. On the other side, electricity transmission and distribution service providers are exempted from charging service tax to these domestic users.

The exemption runs from 17 September 2026 to 31 December 2026. As the policy was issued on 1 October 2026, the exemption period had already started by the time it was announced. Customs has also stated that the policy is subject to amendment if there is any related policy change.

The policy is limited in scope. It covers domestic users only, and it does not explain how usage above 800 kWh is treated. It also says nothing about any extension beyond 31 December 2026.

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