Budget 2025-26: Govt likely to impose 18% sales tax on solar panels

The government of Pakistan is planning big changes in the upcoming federal budget for 2025–26 to help increase tax revenue. The Federal Board of Revenue (FBR) aims to collect around Rs 200 billion through higher sales tax and Federal Excise Duty (FED).

One major proposal is to impose an 18% sales tax on imported solar panels, which are currently tax-free. If approved, this will make solar panels more expensive for buyers.

Another proposal is to apply the same 18% sales tax to e-commerce transactions, bringing online businesses into the formal tax system.

The FBR has also prepared a list of items that may be removed from the Sixth and Eighth Schedules of the Sales Tax Act. These schedules currently give tax exemptions or reduced tax rates on many goods. If these changes are made, many items could soon be taxed at the full 18% rate.

The budget may also bring new tax rates for goods currently taxed at lower rates, helping the government increase its tax base.

However, there is some relief too—cancer-related medical equipment and other essential life-saving drugs are likely to remain tax-free or be added to the exemption list.

These measures show the government’s effort to increase revenue while trying to protect critical health-related items from higher taxes.

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