Government to Eliminate Sales Tax on Solar Panel Imports

The government is preparing to remove the sales tax on imported solar panels, which is projected to have a revenue effect of Rs 20 billion in the fiscal year 2025-26.

An alternative proposal suggests decreasing the sales tax on solar panel imports from the initially planned 18 percent to 10 percent. Complete elimination of the 18 percent sales tax is also highly probable.

The Federal Board of Revenue (FBR) is currently working to finalize equivalent alternative revenue measures. These will then be presented to the Prime Minister for final approval.

The FBR might propose increasing the Federal Excise Duty (FED) on imported vehicles. Another option under consideration is re-evaluating the reduced sales tax rates on specific items listed in the Sales Tax Act’s Eighth Schedule (Conditional Exemption) or Sixth Schedule (Exemption Schedule).