Solar panel system: Senate body rejects withdrawal of ST exemption

ISLAMABAD: The Senate Standing Committee on Finance and Revenue has rejected the proposed withdrawal of sales tax exemption on solar panel system, arguing that the measure would discourage the people to switch to cheap energy.

On Friday, the meeting of the committee presided over by Senator Talha Mahmood continued discussing the Finance Supplementary Bill, 2021 and senators from the treasury and the opposition in unison opposed tax on solar panels, and the committee rejected the proposal.

Senator Faisal Sabzwari’s contention was that by taxing the solar panel system the government was leaving no option for the people but to buying expensive electricity, whereas, Faisal Rehman said that solar panel was being used by the poor in the villages who could not afford expensive electricity.

The committee also rejected tax on overseas Pakistanis’ personal belongings imported from abroad and recommended that bank guarantee should be taken from ghee, steel, and plastic, in FATA and on import of raw material by pharma industry.

The committee also sought details of pending cases of guarantee from the Federal Board of Revenue (FBR).

Chairman FBR Dr Muhammad Ashfaq again stated that the International Monetary Fund (IMF) does not stop from paying speedy refunds and providing subsidies, all it wants to do away with is tax distortion.

He said that the rate of refunds of the FBR this year is 98.5 percent and also invited the committee to visit the FBR headquarters for a presentation on the refund system. He said that the committee would be given a detailed presentation on the upgraded system of refunds. The chairman FBR stated that he has held a meeting with the finance minister with regard to tax on the agriculture sector and suggested that subsidy on urea should be directly provided to the farmers instead of providing it to the industry.

On the issue of imposing tax on sewing machine, the chairman FBR argued that the manufacturers and stitching industry benefiting from the exemption. However, Senator Farooq H Naek said that it was not possible without the connivance of the officials of the FBR and does provide justification to increase the hardships of the poor women whose source of income for their families was this sewing machine. He said that rich people have been buying their stuff from the boutiques prepared by the poor women living in the villages. Upon this, the committee decided to recommend change in the word, from household type to commercial type.

Senator Subzwari also held serious reservations on tax imposition on laptop/computers, stating that it is against the idea of the prime minister’s digitalised Pakistan.

The committee discussed the issue of LTO Islamabad raids on Metro Shoes offices and the CEO of Metro Shoes informed the committee that the FBR raided the offices and his houses without serving any notice and alleged the tax officials of harassing his family. He further stated that now he was being asked to deposit certain amount for withdrawal. The committee asked the chairman FBR to look into the matter and submit a report after getting the version of the department to report on Monday. The chairman FBR said that tax default was a criminal offence and not a civil matter but assured the committee of submitting report on Monday when the committee would meet again to take up the money bill.

Copyright Business Recorder, 2021