Islamabad, June 18, 2025 – In a significant move aimed at balancing fiscal needs with clean energy goals, the government has revised the proposed General Sales Tax (GST) on solar panels from 18% to 10%.
Deputy Prime Minister and Foreign Minister Senator Muhammad Ishaq Dar made the announcement during a budget session in the National Assembly on Wednesday, highlighting the importance of consensus-driven policymaking.
Senator Dar explained that the decision followed extensive consultations with coalition partners, the Federal Board of Revenue (FBR), and other stakeholders. He acknowledged that the earlier proposal to impose 18% GST on solar panels had sparked considerable concern among environmentalists, industry stakeholders, and parliamentarians alike. “After reviewing that 54% of solar components were already taxed under the existing regime, we concluded that a flat 18% GST would burden clean energy adoption. Therefore, it has now been revised down to 10%,” Dar said.
He emphasized that while taxation is crucial for revenue generation, the government remains committed to supporting the growth of renewable energy. “Any relief offered in one area must be compensated in another. But when it comes to solar panels, we recognize their long-term environmental and economic benefits,” he added.
The revised tax on solar panels is expected to ease affordability and encourage more households and businesses to transition toward solar energy. The move aligns with the government’s broader climate resilience strategy and its ambition to increase reliance on sustainable energy sources.
Senator Dar also addressed other key fiscal matters, including the digital sales tax, confirming that its implementation would remain within provincial jurisdiction. Additionally, he announced continued PSDP funding of Rs 4.7 billion for a new university in Sindh under the Higher Education Commission (HEC).
During the session, Pakistan Peoples Party (PPP) MNA Syed Naveed Qamar expressed gratitude to Prime Minister Shehbaz Sharif and Senator Dar for incorporating major PPP and Sindh government proposals. He particularly welcomed the reduction in solar panel tax, calling it a “sensible and much-needed decision” that supports energy reform.
The government’s adjustment is being viewed as a positive step toward boosting the local solar industry, while demonstrating flexibility and responsiveness to public concerns over tax burdens on renewable energy initiatives.