Islamabad:
The committees of the National Assembly and the finance of the Senate rejected the proposed taxation of a sales tax of 18% on solar panels, citing concerns about its potential negative impact on the adoption of green energy.
The decision occurred during the deliberations on the financial bill for the financial year 2025-2026 Tuesday, which includes a wide range of reforms and amendments aimed at expanding the tax base and strengthening the application.
The Standing Committee of the National Assembly on Finance, chaired by Syed Naveed Qamar, discussed in detail about the proposed tax. The committee expressed unanimous opposition, Qamar noting that all political parties had already expressed their disapproval of any taxation on solar energy.
He warned that such a measure could discourage the transition to renewable energies and undermine environmental objectives.
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The president of the Federal Board of Return (FBR), Rashid Mahmood Langrial, said at the meeting that the tax would not be applied to the solar panels fully imported and ready to install, but would rather target imported components used for the local assembly. However, this clarification did not do much to appease the concerns of the committee.
The Minister of Finance Muhammad Aurangzeb agreed with the position of the committee, observing that the price of solar panels had dropped considerably in recent years, which makes them more accessible. He assured members that the government would achieve its income objectives by alternative means, in particular taxing carbon drinks and the increase in carbon samples.
During the same session, the Committee examined the amendments proposed in articles 37A and 37AA of the financial bill, aimed at limiting large -scale tax fraud.
Under new provisions, people involved in fraud exceeding 50 million rupees can be stopped. FBR officials explained that the process would imply the publication of three opinions before any arrest, with the measure reserved for cases where there is a risk of flight.
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Aurangzeb underlined the need for guarantees to prevent the abuse of these powers. He said that arrest decisions would be examined by a committee of three members within the FBR and reaffirmed that the Prime Minister had ordered that the abusive use of arrest provisions be strictly avoided.
The Minister of Finance also confirmed his intention to gradually reduce subsidies, including those who benefit from the solar sector, within the framework of the efforts to rationalize the fiscal policy.
Simultaneously, the FBR will continue the stricter application against unregistered entities and can use frost bank accounts or to close non -compliant companies.
Committee members have also raised concerns about illicit trade in the tobacco sector. While supporting the stronger application to slow down tax evasion, several legislators have warned against the granting of uncontrolled powers to application organizations, warning that this could lead to corruption and harassment.
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Furthermore, the Committee examined the government’s decision to withdraw the federal excise obligation on real estate during the next financial year, noting its conflict with the laws governing mobile assets.
The debate also occurred on the increase in taxation on small vehicles as part of Pakistan’s commitments to the International Monetary Fund (IMF).
The sales tax on cars under 850 cc increased from 12.5% to 18%, arousing criticism from members who argued that the measure has an impact in a disproportionate manner in the middle class.
Although no decision was made to retreat the increase, the committee recommended a policies examination to facilitate the burden of consumers.
The deliberations of the financial committees reflect the wider challenge that the government is faced while it is trying to improve income without blocking economic activity or undergoing public well-being.
