Government reduces solar panel sales tax in FY2025-26 budget

The federal government has decided to reduce the proposed sales tax on imported solar panels from 18% to 10%, bringing major relief to the renewable energy sector. This move follows strong public opposition and discussions during the ongoing budget talks.

Deputy Prime Minister Ishaq Dar announced the change while speaking in the National Assembly. He said the government has made changes to some of its original budget proposals. The decision comes after the Standing Committee on Finance rejected the earlier plan to impose an 18pc tax on solar panels.

Dar also mentioned that budget discussions with coalition partners are still happening. On another topic, he explained that the power to tax digital services belongs to the provinces, not the federal government.

In a separate announcement, Dar shared that the government will increase funding for universities in Sindh from Rs 2.6 billion to Rs4.6 billion, to support higher education in the province.

The reduced solar panel tax is expected to encourage more people to use clean energy and help lower costs. This step supports Pakistan’s goals of sustainable development and becoming more self-reliant in energy.

Earlier, on June 10, Finance Minister Muhammad Aurangzeb had suggested an 18 percent tax on imported solar panels in his 2025–26 budget speech. The aim was to support local manufacturing. However, the idea faced strong criticism, especially from PML-N allies, who said it would make solar energy too expensive for regular citizens.

In 2024–25, Pakistan became the world’s largest importer of solar panels, bringing in a record 70 gigawatts — showing how fast the country is turning to solar power.

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