The soldiers took the flag from one of the cars going through the checkpoint located near Nablus, a city in northern West Bank, JTA said on Wednesday.
The Palestinian Authority has submitted an official complaint to Israel over the incident, according to the Palestinian Ma’an news agency.
An Israeli army spokesperson told Ma’an that the soldiers “did not act in accordance with the IDF’s [Israeli army] standards.”
According to JTA, the soldier who set the flag on fire was sentenced to 28 days of detention, while his squad commander was relieved from his position and sentenced to 20 days in military prison.
Palestinians seek the recognition of their independent state, proclaimed in 1988, on the territories of the West Bank, including East Jerusalem, and the Gaza Strip.
The Israeli government refuses to recognize Palestine as an independent political and diplomatic entity, and builds settlements on the occupied areas, despite objections from the United Nations.