Pakistan cuts proposed solar tax to 10% amid industry concerns

Pakistan has reduced the proposed sales tax on solar panels from 18% to 10%, responding to public outcry over the potential impact on clean energy adoption and domestic solar growth.

Deputy Prime Minister and Foreign Minister Ishaq Dar announced the revised rate during the federal budget session in the National Assembly on Wednesday.

He said the decision came after extensive discussions with coalition partners, the Federal Board of Revenue (FBR), and other stakeholders.

“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 told parliament.

Dar added that the earlier proposal to impose a uniform 18% GST sparked backlash from environmentalists, industry leaders, and lawmakers. Many warned it would discourage clean energy use and increase energy costs for citizens and businesses.

According to government figures, Pakistan has imported 32,000 megawatts worth of solar energy equipment, valued at over PKR 22.5 billion.

Of this, 6,271 MW is connected through net metering, 6,506 MW has been installed without it, and 5,521 MW is off-grid, bringing the country’s total solar inventory to around 13,000 MW.

Officials say tax-free imports are hurting local manufacturers, with imported panels being “dumped” into the market at cheap prices.

Sources confirm that the government now aims to balance solar adoption with support for domestic industry.