The federal government of Pakistan has reduced the proposed sales tax on solar panels from 18% to 10%. The adjustment, announced during the revised federal budget presentation for 2025–26, is seen as a move to encourage the adoption of renewable energy across the country.
Deputy Prime Minister Ishaq Dar informed the National Assembly that the revision followed extensive discussions with coalition partners and feedback from stakeholders. He stated that the government made several key amendments to the budget to address public concerns and align with sustainable energy goals.
The initial proposal to impose an 18% sales tax on solar panels had triggered strong opposition from lawmakers, environmental advocates, and the solar industry. Many argued that such taxation would discourage consumers from shifting to cleaner energy sources and contradict the country’s environmental commitments.
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Earlier this week, the National Assembly’s Standing Committee on Finance, led by Naveed Qamar, had rejected the 18% tax proposal. During committee discussions, the Federal Board of Revenue (FBR) clarified that while fully imported solar panels and cells remained exempt, specific components used for local assembly were subject to taxation. This selective taxation drew criticism from several members.
Committee member Mirza Iftikhar questioned the rationale behind taxing any part of the renewable energy supply chain. He also expressed dissatisfaction with the quality and pricing of locally assembled solar panels, claiming they were both more expensive and less efficient than imported models.
