Govt announces major tax reduction on solar panels

ISLAMABAD: The federal government has announced a major reduction in sales tax on solar panels, which was proposed in the budget for the fiscal year 2025-26.

Speaking in the National Assembly, Deputy Prime Minister Ishaq Dar announced a reduction in the 18 percent sales tax imposed on solar panels in the budget to 10 percent.

Ishaq Dar said that the government has revised some budget proposals, and consultations with allies on the budget are underway.

He also underscores that the sales tax on digital services is the right of the provinces.

The Deputy Prime Minister said that the amount allocated for Sindh universities is being increased from Rs 2.6 billion to Rs 4.6 billion.

Earlier, the government had announced that impose an 18 percent sales tax on solar panels in the budget for the next fiscal year, which was rejected by the Standing Committee on Finance.

The NA body’s meeting, which was presided over by Naveed Qamar, was informed by the Chairman Federal Board of Revenue (FBR) that solar cells are exempt from sales tax.

The importation of full solar panels is exempt from sales tax. Parts that are imported to be finished here are subject to taxes, the head of the FBR stated.

“If you are talking about renewable energy, you shouldn’t slap a tax on solar panels,” Mirza Iftikhar stated. “Imported solar panels are less expensive than locally made ones, which are also of lower quality,” he stated.

The FBR’s proposal was rejected by the standing committee members by a majority vote.