• Members of parliamentary committees say protectionist measures unnecessary as no one producing solar panels locally
• Omar Ayub insists tariff structure altered under IMF pressure
• Nafisa Shah slams ‘martial law-style’ FBR enforcement measures
ISLAMABAD: In a rare show of unity, parliamentary committees on Tuesday unanimously rejected the proposed 18 per cent sales tax on imported solar panels and recommended lowering tax rates on smaller cars to ease the burden on low-income groups.
The Senate and National Assembly Standing Committees on Finance and Revenue held parallel sessions at Parliament House to conduct a clause-by-clause review of the Finance Bill 2025-26.
Both panels, chaired by Senator Saleem Mandviwalla and MNA Naveed Qamar respectively, proposed amendments and rejected several measures outright.
Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial defended the solar tax, arguing it would protect domestic manufacturers. However, lawmakers pointed out that solar panels are not produced locally and questioned the need for early protectionist measures.
Mr Qamar and other members warned that taxing solar imports now would limit access to affordable renewable energy and increase electricity costs. Mirza Ikhtiar Baig asked why the government would want to deprive the public of cheaper power solutions.
The National Assembly committee members also alleged that ahead of the budget, certain stakeholders had imported and dumped solar equipment in anticipation of the tax hike.
Following deliberations, members across party lines agreed to scrap the tax proposal, emphasising that solar panels remain vital for providing affordable electricity.
Pakistan is rapidly emerging as a key leader in solar power deployment. The country has boosted solar electricity generation by over three times the global average so far this year, fuelled by a more than fivefold rise in solar capacity imports since 2022, Reuters said, quoting data from the energy think tank Ember.
That combination of rapidly rising capacity and generation has propelled solar power from Pakistan’s fifth-largest electricity source in 2023 to its largest in 2025.
So far in 2025, solar power has accounted for 25pc of Pakistan’s utility-supplied electricity, which makes it one of fewer than 20 nations globally that have sourced a quarter or more of monthly electricity supplies from solar farms.
Small cars, big tax
The Senate committee also expressed serious concern over the increase in GST from 12pc to 18pc on small vehicles, including 850cc cars.
Mr Mandviwalla called the 18pc sales tax on a Rs3 million vehicle “unfair”, a sentiment echoed by several senators. Proposals were discussed to moderate the tax to 14pc or 15pc instead.
Senator Shibli Faraz criticised the inequity, noting that while tax relief is being extended to certain regions, small car owners continue to face high taxation.
However, the committee approved a sales tax exemption on aircraft imports as part of PIA privatisation.
The panels were briefed on proposed changes in the tax fraud definition, which has now been divided into two categories. If a suspect poses a flight risk, authorities will proceed to arrest them.
Additionally, individuals involved in record tampering or who fail to respond to three official notices will also face detention.
The FBR will establish a three-member board to review cases before approving arrests.
No arrests will be made for tax fraud cases involving amounts below Rs50 million.
‘IMF pressure’
During the session, MNA Omar Ayub remarked that the tariff structure had been altered under IMF pressure.
On the issue of curbing the sale of illegal cigarettes, the FBR proposed granting law enforcement agencies and the district administration the authority to act against the perpetrators.
However, committee members voiced concerns over potential corruption, arguing that delegating such powers could fuel bribery.
FBR Chairman Langrial insisted that enforcement powers must be given to police and local authorities to effectively tackle tax evasion in the tobacco sector.
The committee members pushed back, warning that such a move could open doors to extortion and suggesting that enforcement remain solely under FBR’s jurisdiction. In a sharp retort, Mr Langrial remarked, “Are our officials somehow incorruptible?”
A heated exchange unfolded during the meeting between MNA Nafisa Shah and the FBR chief. Ms Shah criticised the enforcement measures, likening them to “martial law-style regulations”, asserting such actions cannot be justified under any circumstances.
Mr Langrial defended his position, stating, “I serve a democratic government.” He expressed disapproval over Ms Shah’s remarks, noting that using terms associated with martial law was inappropriate.
In response, Ms Shah insisted on her right to free speech, emphasising that, as a member of the National Assembly, she holds the authority to voice her opinions. “You may defend your institution, but we will exercise our right to express ourselves,” she said.
While the federal government aims to levy sales tax on digital services, provincial authorities have expressed reservations, citing their existing 15pc service tax on such businesses. However, FBR officials argued that taxation on online sales falls outside provincial jurisdiction.
From the next fiscal year, iron scrap importers will be obligated to sell only to registered manufacturers. Officials said this measure aims to eliminate the misuse of “flying invoices” and commercial manipulation in scrap trade.
Published in Dawn, June 18th, 2025
