Parliamentary panels reject proposed 18pc sales tax on solar panels in budget

ISLAMABAD: Parliamentary committees have rejected the government’s proposal to impose an 18 per cent sales tax on solar panels in the 2025-26 budget.

The proposal came under discussion during separate meetings of the National Assembly and Senate Standing Committees on Finance held on Tuesday. Both committees unanimously rejected the move.

The National Assembly’s Standing Committee, chaired by Syed Naveed Qamar, held a detailed discussion on the proposed 18 per cent tax on solar panels. The FBR chairman briefed the committee on the proposal, but members expressed serious reservations and rejected it.

During the briefing, the FBR chief clarified that fully assembled imported solar panels are currently exempt from sales tax. However, he said, if solar panel components are imported and assembled locally, they are subject to an 18 per cent sales tax. He added that while solar panel prices were high in the past, they have significantly dropped in recent times.

Committee Chairperson Naveed Qamar said that all political parties in the House have opposed the tax on solar panels. “If the government wants to increase revenue, there are dozens of other ways to do so. Taxing solar energy is an added burden on the poor,” he said.

Members of the committee pointed out that prices of solar panels have already seen a significant hike within two weeks of the tax announcement, making them unaffordable for the average citizen.

Committee member Mirza Ikhtiar Baig argued that if the government genuinely wants to promote renewable energy, it must not tax solar equipment. He also highlighted that locally assembled solar panels are of inferior quality compared to imported ones, which are not only better in quality but also more cost-effective.

The FBR chairman noted that the proposed 18 per cent GST is expected to generate Rs 20 billion annually. However, committee member Shehram Tarakai countered that if the government wants to bring in technology, it must provide relief to the public. “The cost of doing business in Pakistan is already too high, and this tax will worsen the situation,” he added.

At the conclusion of the meeting, Naveed Qamar reiterated the committee’s clear stance against the tax. In response, Finance Minister Muhammad Aurangzeb acknowledged the committee’s concerns and said their recommendation had been noted.

The committee rejected the FBR proposal by majority vote, though member Javed Hanif submitted a dissenting note. He argued that imported solar panels are being “dumped” in Pakistan, and thus should be taxed at 18 per cent to encourage local production. “If imported panels remain tax-exempt, domestic manufacturing will never flourish,” he said.

Meanwhile, a separate meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla, also recommended withdrawing the 18 per cent GST on solar panel imports proposed in the 2025-26 budget.

Senators unanimously called the tax “unjust” and demanded its immediate withdrawal. Members pointed out that prior to the budget’s announcement, certain individuals had imported and hoarded large quantities of solar panels, anticipating the new tax.

They said the sudden imposition of 18 per cent sales tax has severely impacted the solar industry.

Chairman Saleem Mandviwalla opposed the tax decision, terming it an added burden on the public, which has led to a steep rise in solar panel prices.

It is worth noting that in the 2025-26 budget, the government proposed an 18 per cent General Sales Tax (GST) on solar panels and their components imported from abroad for local assembly in Pakistan.