Deputy Prime Minister Ishaq Dar on Wednesday announced the government has agreed to reduce the proposed general sales tax (GST) on solar panels from 18% to 10%, adding digital sales tax on services will remain the jurisdiction of provinces.
Addressing the National Assembly, the senator said the decisions on the controversial budgetary proposals were taken after detailed discussions with coalition partners and relevant stakeholders. “The concerns regarding digital taxation were valid,” he said. “We held in-depth consultations with all stakeholders, including the Federal Board of Revenue (FBR), and it has been decided that the matter will be clearly addressed in the finance minister’s budget winding-up speech,” he added.
He noted the proposed 18% GST on solar panels had triggered significant debate, adding a review that discovered that 54% of components used in solar setups are already taxed under the existing regime while the new tax would be applied to the remaining 46%. After mutual consultations, he announced, the government had decided to reduce the solar GST from 18 to 10%.
Emphasizing that tax proposals are essential for revenue generation, he explained that relief in one area necessitates compensation elsewhere. He noted the federal cabinet had increased the salary for government employees from 6 to 10%, requiring corresponding budgetary adjustments. “We must move forward collectively,” he said.
Dar also explained that the government had decided to maintain funding for proposed universities in Sindh under the Public Sector Development Program (PSDP) at Rs4.7 billion through the Higher Education Commission (HEC). He noted lawmakers had raised concerns about the closure of the Public Works Department, confirming the Pakistan Infrastructure Development Company Limited would oversee all federal development projects in every province.
He said the government was willing to address genuine concerns through mutual dialogue and constructive engagement.
Pakistan Peoples Party (PPP) leader Syed Naveed Qamar thanked Prime Minister Shehbaz Sharif and Dar for accommodating the proposals forwarded by his party and the Sindh government. “We had wanted to reduce all 18% tax on solar panels but it cannot do so. After approval of budget, a committee will be formed to discuss further reduction in tax on solar panels,” he added.
He said the decision to expand the mandate of the Pakistan Infrastructure Development Company Limited to all provinces had also addressed a PPP concern.