ISLAMABAD: The Federal Board of Revenue (FBR) has not imposed any new 18 percent sales tax on solar consumers under new policy.
FBR top officials were responding to a query of Business Recorder on a tweet of former Finance Minister Miftah Ismail.
FBR officials clarified that 18 percent sales tax was already applicable on bills of domestic consumers of electricity from solar or not. Thus, no new sales tax has been imposed on solar consumer as reflected in the tweet of Miftah Ismail.
An impression was created in the tweet that some kind of new sales tax has been imposed on electricity consumers of solar panels, senior FBR officials added.
READ MORE: Tax on imported solar panels: what does it mean for Pakistan’s renewable energy future?
According to the tweet of former Finance Minister Miftah Ismail, “I read in the news that your government has moved to something called gross metering and has effectively reduced the rate for new solar customers from Rs 27 per unit to Rs 8.43 per unit and for existing solar customers from Rs 27 per unit to Rs 22.88.
DISCOs will now deduct 18 percent sales tax from each unit they buy from the solar customers and also add 18 percent sales tax to each unit sold to customers.
Previously DISCOs were only applying sales tax on net units sold to the customers (ie if the Disco sold 600 units to the customers but also bought 120 units from the customer then it charged sales tax on 480 units and applied the appropriate rate per unit) but now they will apply sales tax to all the units sold to the customers so the rate of units sold will be Rs 44.84 per unit plus 18% sales tax (Rs 8.07) for a total of Rs 52.92 per unit.
And units bought from the existing solar customers will be Rs 27 minus 18 percent sales tax withheld or Rs 22.88 per unit or Rs 10 per unit minus sales tax or Rs 8.43 per unit for new solar consumers.
Hence even the existing solar customers will see a huge increase in their bills. You will please correct me if my calculations are wrong.
Awais bhai I submitted to you that the total cost of buying units from solar customers cannot be more than Rs 50 billion so your loss cannot be Rs 150 billion. You said that Rs 150 billion was a burden on DISCOs. Bhai how can the burden be more than the total money DISCOs paid them (around Rs 50 billion and for which DISCOs got close to 2 billion units of electricity).
Are you actually saying that customers’ not buying expensive electricity from the grid and either using less electricity (turning off their ACs at Fajar) or self-generating from solar panels is a burden on the government? Isn’t that like Toyota company saying that customers who buy Kia are causing a burden on their company. What do smart companies do when competition comes? They improve their product and reduce prices.
What is the government doing? They are forcing the customers to buy more at a higher rate. The reason power is considered to be a natural monopoly is that a large-scale set-up will be able to generate and distribute electricity much more cheaply than can be done at smaller scale.
Hence this business worldwide is either government-owned or government-regulated. Our power sector is both. And yet the government is selling power much more expensively than even a domestic household can generate. Therefore the governmental inefficiency is turning the entire economic model on its head.
What’s the point of a government monopoly if you cannot match the price of power generated by home solar panels? You say that the govt has a lot of fixed capacity and the variable cost of producing power is under Rs 10 per unit.
On top of that the government this year has budgeted over Rs 800 billion in power sector subsidy which is about half your capacity cost. So what is the justification for selling power at such an expensive rate but for the inefficiency of the power sector and a wrong policy that restricts power consumption at all levels.
So really you should be pricing power closer to your variable cost and selling a lot more electricity rather than forcing consumers to buy the most expensive power in South Asia and considering people who consume their own solar power a burden. You said in your first tweet that solar consumers who were getting Rs 27 for their power but buying power from the government at almost twice that rate were making “windfall” profits. This time you have defended decreasing the rates by saying the government shouldn’t have to “satiate the whims of a few hundred thousand top 0.1% households”.
Awais bhai I assure you most households who have installed solar are not rich elites but middle class, tax-paying Pakistanis who make this country run, he added.
Copyright Business Recorder, 2026
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