FBR mulls withdrawing sales tax exemption on solar panels in upcoming budget

The Federal Board of Revenue (FBR) is considering a proposal to withdraw the sales tax exemption on solar panels in the upcoming fiscal year 2025-26, according to FBR Chairman Rashid Mahmood. 

The announcement was made during a meeting of the Senate Standing Committee on Finance on Thursday, where Mahmood responded to a query about the government’s plans regarding tax exemptions. 

He confirmed that FBR is exploring proposals to remove all forms of tax exemption, including the one granted on the import of solar panels.

In a separate meeting of the National Assembly Standing Committee on Finance, representatives from the refinery sector presented concerns regarding a longstanding issue in the taxation of their products. 

They explained that while their input is taxed, there is no GST on their output, which has created significant operational challenges over the years. The refineries indicated that without resolving this issue, they would not be able to proceed with their planned $6 billion investment.

Chairman Mahmood responded by stating that the business of refineries had been removed from the scope of Value Added Tax (VAT) when taxes on output were removed. He mentioned that there were proposals being considered to either impose sales tax on their output or find alternative solutions to address their concerns.

Meanwhile, the committee also discussed an issue raised by member Mirza Ikhtiar Baig concerning the recovery of over Rs 80 million from KababJee Restaurant in Karachi. Baig informed the committee that FBR had seized the amount from the restaurant’s accounts without allowing them a chance to present their case. The restaurant owner, he claimed, was facing financial difficulties and had even threatened to commit suicide due to the financial strain. 

FBR Chairman Mahmood assured the committee that he would inquire into the matter with the relevant FBR field office and provide an update.