Solar association protests 17pc tax on solar panels

LAHORE: Representatives of the Pakistan Solar Association (PSA) held a press conference here at the Lahore Chambers of Commerce and Industry (LCCI) on Friday, against a 17 per cent sales tax levied on the import of solar panels and demanded immediate withdrawal.

Representatives of PSA informed the media that the government had earlier announced that the proposal for tax on solar devices has been scrapped. However, on January 17,2022, importers while submitting the import Goods Declarations (GDs) on the Federal Board of Revenue (FBR) learnt that the sales tax exemption on solar devices has been abolished.

LCCI President Mian Noman Kabir while speaking on the occasion said that imposition of 17 per cent tax on solar energy devices would harm efforts to promote alternative energy sources in the country.

However, speaking on the condition of anonymity an official of the Federal Board of Revenue (FBR) revealed that apart from the 17 per cent general sales tax importers will also have to pay other taxes on the import of solar panels. 

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“In the case of solar panels only, the importer will now have to pay 16 per cent customs duty, 17 per cent sales tax, 3 per cent additional sales tax, 11 per cent income tax and 4 per cent additional customs duty at the landing port. Moreover, if the import is taking place at the Karachi port then 1.5 per cent Sindh excise duty will also apply. Earlier, the solar industry did not pay any such taxes,” he said.

On the other hand, Pakistan Solar Association’s (PSA) former chairman Nouman Khan, while talking to Profit said that earlier no GST was implemented on import of solar panels and hence the invoices issued to customers were also zero-rated. 

According to Nouman Khan, the 17 per cent sale tax on solar panels will now be passed on to the consumers while other taxes and custom duties will increase the cost of solar panels hence making them more expensive.

“Similarly, we used to pay income tax a year later but now we have to pay income tax in advance. Obviously, the rate of tax on solar imports will now be around 51 per cent [if you include all taxes] and the prices of solar panels will increase by more than 51 per cent,” he said.

However, as of yet the price of solar panels in the market has not increased as various chambers and associations intend to hold protests in this regard and are also trying to negotiate with the government,” said.

According to Khans calculations, if an importer imports Rs1 million worth of solar products, a 51 per cent tax rate would take the cost to more than Rs1.5 million before the importer has even factored in his own profit margin. 

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Shahab Omer
The writer is a member of the staff and can be reached on [email protected]

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