ISLAMABAD: The federal government has agreed to reduce the proposed sales tax on solar panel imports from 18% to 10%, following negotiations with coalition partners and in compliance with the International Monetary Fund (IMF) agreements.

The lawmakers had initially demanded a full exemption, advocating for a zero-rated tax regime on solar panels. However, due to IMF commitments, the government can only lower the tax to 10%. An official announcement on the revised tax rate is expected later today.

Under the IMF agreement, two key conditions are in place: a 10% sales tax must be applied where a zero-rated regime previously existed, and where sales tax exceeds 5%, it must be increased to 18%.

This move aims to balance fiscal policy with international financial obligations while supporting renewable energy initiatives.

Federal government proposed the budget for the financial year 2025-26, revealing its intention to impose 18% sales tax on imported solar panels.