Islamabad, June 18, 2025 – The Federal Board of Revenue (FBR) is now considering the imposition of a 10% sales tax on imported solar panels in the upcoming fiscal year 2025-26.
This revised proposal follows widespread backlash over an earlier suggestion to impose an 18% sales tax on the completely built units (CBUs) of solar panels, which was rejected by lawmakers and key stakeholders.
Initially, the FBR had proposed eliminating the sales tax exemption on solar panels through the Finance Bill 2025, aiming to level the playing field for domestic manufacturers. The 18% sales tax proposal was intended to reduce market distortion and encourage local production. However, the move triggered strong resistance from both the public and parliamentarians, who argued that taxing solar panels amid rising energy prices would be counterproductive and hurt Pakistan’s shift towards renewable energy.
In response to this political and public opposition, the National Assembly’s Standing Committee on Finance and Revenue unanimously rejected the 18% proposal, labeling it as unfeasible during a time when solar panels are increasingly seen as a crucial solution to Pakistan’s electricity crisis.
Now, the FBR is weighing a more moderate 10% sales tax on CBU solar panels, which could eventually increase to a flat 18%. During a recent committee meeting, the FBR chairman highlighted the potential revenue impact of withdrawing the tax, estimating a combined revenue loss and subsidy cost of Rs40 billion. He further explained that both the import and supply of photovoltaic cells, whether assembled into panels or not, currently enjoy full exemption from sales tax—benefiting commercial importers at the expense of domestic manufacturers.
Committee members argued that prices of solar panels have already spiked since the budget announcement. They stressed that solar panels are essential for households and businesses shifting to renewable energy to avoid skyrocketing electricity bills.
Finance Minister Muhammad Aurangzeb assured the committee that their concerns were being considered, while Qamar and Mirza Ikhtiar insisted that solar panels should remain untaxed if Pakistan truly aims to promote renewable energy.
The FBR also revealed that over-invoicing worth Rs65 billion in solar panel imports had been detected—linked to money laundering and dollar outflows—highlighting the urgent need for better regulation in the sector.