The federal government has decided to lower the proposed sales tax on solar panel imports from 18% to 10% following pressure from coalition partners, according to official sources.
Lawmakers had originally advocated for a complete tax exemption, urging the government to reduce the tax to zero percent. However, under Pakistan’s agreement with the International Monetary Fund (IMF), certain tax reforms are required — including the imposition of a 10% sales tax on products that were previously under a zero-rated regime.
Despite strong demands from coalition partners, the government could not grant full exemption due to IMF constraints. Still, it has opted to significantly scale back the proposed tax from 18% to 10%. An official announcement confirming the new rate is expected later today.
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As per the IMF agreement, two main conditions must be met:
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A minimum 10% sales tax must apply where zero-rated status previously existed.
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Where the current sales tax is above 5%, it must be raised to 18%.
Later, Deputy Prime Minister Ishaq Dar confirmed during a National Assembly session that the government has officially decided to reduce the tax on solar panels to 10% in the upcoming federal budget.
This move is seen as a middle-ground solution, balancing economic reform obligations with political pressures to support clean energy affordability.
