Pakistan cuts sales tax on imported solar panels to 10% amid parliamentary pushback
The Senate Standing Committee on Finance and Revenue had urged the government a day earlier to withdraw the proposed 18% GST on imported solar panels, noting that some stakeholders had begun stockpiling equipment ahead of the federal budget to avoid the new levy.
The country's proposed federal budget for the 2025-26 fiscal year included an 18% GST on the import and local supply of solar panels and related equipment, prompting concern from industry stakeholders and clean energy advocates.
Pakistan imported 17 gigawatts (GW) of solar panels in 2024, twice the volume recorded the year before, to meet rising consumer demand, according to the Global Electricity Review 2025.
'The 18 percent on top of 46% was an additional burden,' Dar told the National Assembly.
'So, regarding this, after consultations and deliberations, we have decided that this year we will keep a 10% sales tax and not 18%.'
Dar highlighted how this was the most debated subject after the budget was announced.
He also explained that around 46% of components used in solar installations in Pakistan were imported while the remaining 54% including inverters and other equipment were locally sourced and already subject to standard taxation.
Solar energy has supplied 25% of Pakistan's grid electricity so far this year, placing the country among fewer than 20 globally that generate at least a quarter of their monthly power from solar farms.
Industry stakeholders and clean energy activists had warned that the added cost in tax could slow the rapid adoption of rooftop solar systems by households and businesses, potentially undermining national targets for expanding the share of renewables in the country's energy mix.
Pakistan increased its solar electricity generation at a rate more than three times the global average in 2025, driven by a surge in solar capacity imports that were over five times higher than in 2022, according to data from Ember, a UK-based energy think tank.
This rapid growth in both capacity and output has propelled solar energy from being the country's fifth-largest power source in 2023 to the top spot in 2025.
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