Govt plans to scrap VAT on electricity
Summary
The government is preparing to remove VAT on electricity after the energy and finance ministers reached an in-principle agreement. The Finance Ministry will propose the change to the Cabinet, and any VAT already collected this fiscal year will be adjusted in later bills.
Key Points
- The government plans to scrap value-added tax (VAT) on electricity after an in-principle agreement between the energy and finance ministers.
- The Finance Ministry will present the proposal to the Cabinet, and the change will take effect only after formal approval.
- VAT was introduced on electricity in fiscal year 2026/27, with 5 percent charged to households using more than 50 units and 13 percent to industrial and other non-household consumers.
- Any VAT collected since the start of the fiscal year will be adjusted in subsequent electricity bills once the tax is removed.
