Electricity Service Tax Increase from 6% to 8%

When Malaysia transitioned from GST to SST in 2018, TNB began charging a Service Tax on electricity bills starting from 2008. The recent changes in this service tax have sparked confusion and concern among consumers, especially after the tax rate was increased from 6% to 8%.

However, it’s important to understand who is affected by this Service Tax in the electricity bill. According to the TNB schedule, the service tax is only charged to residential customers. Commercial, industrial, and other customers are not affected by this service tax.

Remember that the increase in the tax rate from 6% to 8% only applies to electricity users who use more than 600 kWh (kilowatt-hours) effectively in one month. This means that users who have an electricity bill exceeding this value will be affected by the service tax increase. It’s important to understand that this change does not burden industries or businesses.

Nevertheless, there are concerns that the 600 kWh rate may affect the M40 group, especially families with many children. The proposal to review the usage limit in the NECOL meeting on March 20 is a wise step and can align the impact of this service tax to the more moderate-income group.

If there is a need to review this service tax, the best approach might be to raise the usage limit. For example, if the current limit is 600 kWh, the government could consider raising it to 700 kWh or 1000 kWh per month. This would give leeway to the M40 group to avoid this service tax increase, while only those who use electricity on a large scale would be affected.



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