Budget 2025-26: Senate panel opposes tax on imported solar panels

The Senate Standing Committee on Finance and Revenue opposed on Tuesday the government announced 18% tax on imported solar panels, calling for immediate withdrawal of the proposal made by Finance Minister Muhammad Aurangzeb in his budget 2025-26 speech last week.

Aurangzeb proposed the budget for the financial year 2025-26 on June 10, revealing the government’s intention to impose 18% sales tax on imported solar panels, arguing that the decision would help the local industry.

However, the Senate panel strongly opposed the proposal in Tuesday’s meeting chaired by Senator Saleem Mandviwalla. The meeting was also attended by Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, Chairman FBR Rashid Mahmood Langrial, and senior officials of attached departments.

“The committee strongly recommended withdrawing the proposed 18% GST on solar panels. Members observed that ahead of the budget, certain stakeholders had imported and dumped solar equipment in anticipation of the tax hike. The chairman emphasised the discriminatory nature of the move, saying the committee rejects the sudden imposition of GST on solar imports and urges immediate withdrawal,” a statement released by Senate Secretariat read.

Such debate also took place in the National Assembly’s Standing Committee on Finance and Revenue’s meeting on Tuesday, according to sources. However, an official statement from the NA was awaited till the time of filing this report.

Earlier, Sindh Chief Minister Murad Ali Shah has also condemned the federal government proposal to impose 18% tax on solar panels, calling that “unjustified”.

He presented the provincial budget for the fiscal year 2025-26 on Friday, with the budget size set at Rs3.45 trillion, representing a 12.9% increase compared to the estimated Rs3.05 trillion for the previous year (2024-25).

“This budget will play a key role in unleashing Sindh’s untapped potential,” Murad Ali Shah said in the budget speech. “It prioritises inclusive, sustainable, and robust development.”

In the post-budget press conference on Saturday, the chief minister warned that the Pakistan People’s Party (PPP) would withhold support for the federal budget if such regressive measures [tax on imported solar panels] were not withdrawn.

Pakistan is rapidly emerging as a key leader in solar power deployment, and not just within emerging economies. The South Asian country has boosted solar electricity generation by over three times the global average so far this year, fuelled by a more than fivefold rise in solar capacity imports since 2022, according to data from Ember.

That combination of rapidly rising capacity and generation has propelled solar power from Pakistan’s fifth-largest electricity source in 2023 to its largest in 2025.

Meanwhile, a recent research report stated that China exported more solar panels to Pakistan than to many G20 nations, with over 16 gigawatts (GW) imported in 2024 alone.

The report titled ‘Leader of One or Leader of None - China’s Choice for Clean over Coal in Pakistan’ published by think tank Renewables First said more than 39GW of solar panels, nearly all from China, entered Pakistan in the last five years.