Lawmakers in Islamabad have rejected the government’s proposal to impose an 18% sales tax on imported solar panels. Reports say the National Assembly (NA) and Senate finance committees have officially rejected the plan, which was part of the federal budget for fiscal year 2025–26.

 

Finance Minister Muhammad Aurangzeb announced the tax on June 10 while presenting the budget on the floor of the NA. Along with imposing a tax on the import of solar panels, the proposal also aimed to bring digital marketplaces and online sellers into the tax net.

 

During the NA’s standing committee meeting on Wednesday, the FBR’s chairman reportedly informed the finance committee that no tax is currently being charged on completely built solar panels. Instead, the tax is only applicable to panels when their components are imported and the panels are assembled locally. 

 

As per reports, the FBR’s chairman argued that panel prices have dropped significantly over the years, and the proposed GST could bring in Rs20 billion in revenue without significantly reducing their affordability. However, committee members believe that the tax would make solar panels harder to afford, especially for the poor and that panels are not affordable as “solar prices have increased within two weeks.”

 

Lawmakers also argued that business costs are already too high, and taxing solar could serve to exacerbate things. Reports cite MNA Shahida Akhtar Ali, who pushed for taxing goods from other sectors, like sugary drinks, instead of targeting solar panels. Analysts believe that discouraging solar could kill momentum, just as more households are shifting to renewable sources.

 

Data from reports indicate that the FBR also revealed that 32,000 megawatts worth of solar panels have been imported over the last five years. A significant chunk, however, was never installed. 

 

Around 6,000 MW was used for net metering, while the rest was either off-grid or unaccounted for. Officials also flagged cases of over-invoicing and stockpiling ahead of the budget announcement, suggesting that some importers braced for a tax hike by hoarding solar panels. This could allow them to benefit from any increases in prices.

 

In a separate session, the Senate’s finance committee echoed the same concerns and called for an immediate withdrawal of the tax proposal. Members said the move felt abrupt and unfair, especially as many stakeholders had already rushed to dump solar equipment into the market.