The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to collect 18% sales tax from solar net metering customers through all electricity distribution companies (DISCOs). The move comes after a report revealed a financial loss of Rs9.4 billion.
FBR directed to immediately impose 18% sales tax on net metering customers on FTO’s orders. Sales tax to be applicable on the total supply of electricity, excluding the impact of net metering, Order to also collect withholding income tax under Section 235 of the Income Tax Ordinance 2001 (Aaj News)
Impacts.
- Financial pressure on solar consumers – Electricity bills may increase.
- Barrier to renewable energy – Installation of solar panels may decline.
- Possibility of legal challenges – There may be resistance from consumers and the solar industry.
- Increase in government revenue – FBR expects to collect about Rs 12.4 billion in taxes.
The decision could be a major setback for the solar energy industry, environmental organizations and consumers. Rejecting any notification issued by NEPRA, the FTO clarified that tax laws will be implemented in any case.
