Dar’s Budget Update: Digital Tax Stays Local, Solar GST Cut to 10%

Deputy Prime Minister and Foreign Minister, Senator Muhammad Ishaq Dar on Wednesday said that the digital sales tax on services would remain within the jurisdiction of provinces, while the proposed 18% GST tax on solar panels had been reviewed and revised down to 10% following consultations.

Speaking in the National Assembly, Senator Dar stated that after detailed discussions with coalition partners and relevant stakeholders, consensus had been reached on resolving several contentious budgetary issues. As part of the revisions, it was agreed that the imposition of digital sales tax on services falls under the constitutional domain of provincial governments.

“The concerns regarding digital taxation were valid. 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 said.

Dar further clarified that the earlier proposal of imposing 18% General Sales Tax (GST) on solar panels had sparked considerable debate. Upon review, it was revealed that 54% of components used in solarization were already taxed under the existing regime, and the 18% tax applied only to the remaining 46%. However, after mutual consultations, we have now proposed reducing the solar GST from 18% to 10%, he announced.

Speaking in the National Assembly, Naveed Qamar said the government accepted major demands raised by PPP lawmakers during the budget debate. He welcomed the reduction of proposed sales tax on solar equipment from 18% to 10%, aligning with the party’s stance.