Govt Cuts Solar Panel Tax to 10% Amid IMF Deal

The federal government has agreed to cut the proposed sales tax on imported solar panels from 18% to 10%, following strong resistance from coalition partners and in response to IMF-mandated conditions.

Initially, coalition lawmakers demanded a complete exemption on solar panels, urging the government to “bring down the tax rate to zero.”

However, due to Pakistan’s ongoing agreement with the International Monetary Fund (IMF), a full exemption could not be granted. The IMF’s terms require a 10% sales tax on all items that were previously zero-rated.

Sources familiar with the matter confirmed that “maintaining a 10 percent sales tax on items previously covered under a zero-rated regime is mandatory” under IMF conditions. Additionally, where a 5% tax already applies, it must be raised to 18%.

An official confirmation came when Deputy Prime Minister Ishaq Dar addressed the National Assembly, stating that the government has officially decided to reduce the 18 percent sales tax on solar panels to 10 percent in the upcoming budget.

Although the demands for a zero-tax policy could not be fulfilled, this reduction offers some relief to solar energy stakeholders and consumers, aligning both with fiscal requirements and sustainable energy goals.