LAHORE: Deploring imposition of 20 per cent tax -- 17pc sales tax and three per cent additional tax -- on solar panels and equipment in the supplementary finance bill 2021-22, the business community says the Federal Board of Revenue (FBR) has challenged the powers of the finance minister by changing his decision of not imposing sales tax on the imports related to cheap energy generation.

“Everyone saw and heard the finance minister say (in the budget speech) that the government has excluded the solar panels / equipment from the tax list. But, surprisingly, it was not so,” Lahore Chamber of Commerce and Industry (LCCI) President Mian Nauman Kabir said at a press conference organised by the LCCI and the Pakistan Solar Association (PSA) here on Friday.

“I am of the view that the FBR has got this decision dropped by challenging the credibility and the power of the finance minister. It shouldn’t have been done as it negates the PM’s vision of cheap and pollution-free energy generation,” the LCCI chief, who was flanked by PSA’s founder Muhammad Farhan and Senior Vice President Waqas Musa, said.

“We have also written a letter to the quarters concerned to take up the issue,” he added.

Term the move contrary to finance minister’s assurance

On Jan 13, the finance minister announced that the tax on solar panels had been removed from the budget proposal. However, on Jan 17, while submitting import GDs on the FBR portal for customs clearance, it was told by various importers that the sales tax exemption was eliminated and the tax was imposed on solar equipment. The new tax, according to the PSA, will result in a significant increase in the prices of solar panels and related equipment.The association says that the solar and wind power plants are the only alternative energy solution against the rising prices of electricity, gas and petrol and the increasing level of environmental pollution in the country. Residential and industrial consumers in Pakistan have been installing these solar power plants on their own, reducing pollution as well as making a significant contribution to reduction in Pakistan’s import bill for years to come.

“The installation of a solar system is a one-time investment which provides continuous benefits for more than 25 years without any additional expenses, compared to generators and fossil fuel based power plants that require costly diesel and oil to be imported every month,” said PSA founder Muhammad Farhan.

PSA SVP Waqas Musa said if solar, renewable energy etc was exempt from tax, the government could easily construct a dam. “By taxing this sector, the government is also increasing its import bill by Rs450 billion each year. Now you tell that is it a wise decision,” Musa questioned, demanding PM Imran Khan intervene and order abolition of sales tax on solar and other renewable energy related imports.

A Chinese firm which has been awarded contract for the construction of Kohala Hydropower Project under CPEC in Azad Jammau & Kashmir has also come up with similar demands through a letter to the government recently.

Published in Dawn, January 22nd, 2022

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