Key Budgetary Revisions Announced by Deputy Prime Minister Ishaq Dar

Deputy Prime Minister and Foreign Minister Senator Muhammad Ishaq Dar announced on Wednesday that the digital sales tax on services will remain under provincial jurisdiction. Furthermore, the proposed 18% GST on solar panels has been revised to 10% after thorough consultations.

Addressing the National Assembly, Senator Dar indicated that a consensus had been achieved on resolving several contentious budgetary matters following extensive discussions with coalition partners and relevant stakeholders.

Digital Sales Tax

The agreement stipulates that the imposition of digital sales tax on services is a constitutional matter for provincial governments.

Statement on Digital Taxation

“Concerns regarding digital taxation were legitimate. We engaged in detailed consultations with all stakeholders, including the Federal Board of Revenue (FBR), and it has been decided that this issue will be clearly addressed in the Finance Minister’s budget winding-up speech,” he stated.

Revised GST on Solar Panels

Dar further elaborated that the initial proposal to levy an 18% General Sales Tax (GST) on solar panels generated considerable debate. A review revealed that 54% of components used in solarization were already subject to tax, with the 18% tax only applicable to the remaining 46%.

Reduction in Solar GST

“However, following mutual consultations, we have now proposed reducing the solar GST from 18% to 10%,” he announced.

He underscored that tax proposals are vital for revenue generation, and any concession in one area requires offsetting adjustments elsewhere.

He noted that when the cabinet deemed the initial 6% salary increase for government employees inadequate and increased it to 10%, corresponding budgetary adjustments were necessary.

“We must advance together. Our strategy is based on consensus and cooperation,” he affirmed.

Funding for Sindh University and PIDCL Expansion

Highlighting another significant issue, Dar mentioned the decision to maintain funding for a proposed university in Sindh under the Public Sector Development Programme (PSDP) at Rs 4.7 billion through the Higher Education Commission (HEC).

He also acknowledged concerns raised by MNAs regarding the closure of the Public Works Department (PWD) and confirmed that the Pakistan Infrastructure Development Company Limited (PIDCL) will now oversee all federal development projects across provinces.

He clarified that while PIDCL was initially established for Sindh, its mandate has been broadened to supervise development projects across all provinces.

Senator Dar concluded by reiterating the government’s commitment to addressing legitimate concerns through mutual dialogue and constructive engagement.

PPP’s Response

Meanwhile, Pakistan Peoples Party (PPP) MNA Syed Naveed Qamar expressed gratitude to Prime Minister Shehbaz Sharif and Deputy Prime Minister Ishaq Dar for accommodating key PPP and Sindh government budget proposals.

Speaking in the National Assembly, Qamar stated that the government had accepted major demands raised by PPP lawmakers during the budget debate.

He welcomed the reduction of the proposed sales tax on solar equipment from 18% to 10%, which aligns with the party’s position.

He also recognized the government’s decision to extend the mandate of the Pakistan Infrastructure Development Company Limited (PIDCL) to all provinces, instead of limiting it to Sindh, effectively resolving another PPP concern.