NA, Senate panels reject 18pc tax on imported solar panels

The National Assembly and Senate Standing Committees on Finance and Revenue on Tuesday rejected the government’s proposal to impose an 18 per cent sales tax on solar panel imports.

A week earlier, Finance Minister Muhammad Aurangzeb presented the proposed budget for the fiscal year 2025-26 on the floor of the NA, revealing that an 18pc tax would be applied on imported solar panels, while online businesses and digital marketplaces would also come under the tax net.

During today’s meeting of the NA standing committee, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial said that there was no sales tax on photovoltaic cells or solar panels.

“There is no tax on solar panels which are imported as complete products. If parts of solar panels are imported and manufactured here, there is a tax on it,” he said.

“Solar panels used to be very expensive, but now they have become quite cheap,” he added.

Committee chairman Syed Naveed Qamar said, “All political parties opposed the tax on solar [panels] in the House. There are other ways of collecting money and our position regarding tax on solar panels is clear.”

According to committee member Mohammad Mobeen, solar panels became more expensive after the tax decision was announced.

“Check the market to see how much solar prices have increased within two weeks,” he said, adding that the sales tax was “unbearable for the poor”.

The FBR chairman said that 18pc GST will bring in Rs20 billion to the national kitty.

“If technology is to be brought into the country, the government should provide relief to the people,” committee member Shahram Tarakai said. He added that taxes were being imposed when the cost of doing business in Pakistan was already high.

“Solar is a source of alternative energy,” MNA Shahida Akhtar Ali said. “A tax should be imposed on sugary drinks, while tax relief should be given on solar panels.”

According to the FBR chairman, 32,000 MW of solar power was imported in the last five years, and 6,271 MW was used in net metering. He said that 13,000 MW of solar panels were not installed anywhere at that time, adding that 6,506 MW was used in non-net metering, and 5,521 MW of solar panels were used off-grid.

“There has also been over-invoicing in the import of solar panels,” he said, adding that the matter had come up in the Senate Standing Committee on Finance.

A press release issued by the Senate standing committee said that it held its fifth session today.

It said the committee discussed a range of critical recommendations and policy matters.

“The committee strongly recommended withdrawing the proposed 18pc GST on solar panels. Members observed that ahead of the budget, certain stakeholders had imported and dumped solar equipment in anticipation of the tax hike. The chairman emphasised the discriminatory nature of the move, saying, ‘The committee rejects the sudden imposition of GST on solar imports and urges immediate withdrawal.’”

Finance bill 2025

The NA panel also discussed the Finance Bill 2025, which proposed provisions granting arrest and money laundering notice powers to tax commissioners.

According to the FBR chairman, the law gave the impression that it was introduced to arrest traders. “The law on [such] arrest already exists which has seen some changes.

“There is an amendment related to tampering or forgery while the second clause is about tampering and fraud on a large scale.”

He further said that arrests would be made if there was a risk that the suspect of tax fraud was fleeing. “If the tax is not paid despite three notices, then an arrest is made,” he said, adding that the arrest decision was taken by the FBR committee.

MNA Mobeen said that any FBR officer can say that tax fraud has occurred with the amendment and the suspected person will have to prove that they did not commit tax fraud. He questioned, “Is there a timeline set for the arrest and inquiry process?”

“The inquiry will be completed within six months,” the FBR chairman remarked.

On Saturday, a parliamentary panel pressed senior tax officials to drop proposed provisions in the bill, warning the move would create unnecessary obstacles for businesses.

Lawmakers debated the implications of enhanced powers for the FBR and discussed measures to curb tampered vehicles.

Senator Mandviwalla warned that there is a grave risk of misuse of the power to arrest or issue a notice. Even a junior FBR officer sending a notice could create chaos, he warned. He also emphasised that receiving a money laundering notice often leads to business shutdowns.