Sales Tax on Solar Panels in Pakistan (2025-26 Budget and After)

This guide explains what is taxed, what changed in the last two budgets, how businesses treat a solar plant for tax, and what to ask your supplier. We checked these facts on 14 October 2026. This is general information, not tax advice; for business decisions, speak to your tax adviser.

The short answer: what is taxed

Do not rely on a rate from social media or a trader's WhatsApp message. Ask for it in writing on the quotation or invoice.

Diagram

Sales tax on solar

Panels

Tax set in the federal budget

Other kit

Inverters and batteries taxed separately

How the tax on solar panels changed

Before July 2025

Imported solar panels were sold without general sales tax, which helped drive the rapid growth of rooftop solar in 2023 and 2024.

Budget 2025-26: from 18% proposed to 10% agreed

The 2025-26 budget, presented in June 2025, proposed an 18% sales tax on imported solar panels, partly to support local panel manufacturing. The same budget proposed cutting duties on raw materials and machinery for local panel and lithium battery manufacturing. After strong criticism, the Finance Minister announced on 21 June 2025, while winding up the Senate debate on the Finance Bill, that the rate on panels would be 10% instead of 18%.

Budget 2026-27: the proposed rise was dropped

Before the 2026-27 budget, reports said the government was considering raising the rate on panels from 10% to 18%, and the solar industry also warned of higher duties on batteries and inverters. On 12 June 2026, it was reported that the budget left the sales tax on panels unchanged. The Finance Act 2026 was enacted after the National Assembly approved the Finance Bill on 26 June 2026, with changes generally effective from 1 July 2026.

After the budget

On 2 August 2026, the FBR rejected reports that a new tax had been placed on solar panels, saying no fresh tax had been introduced on the solar sector. Panels continue to carry the 10% rate.

What the industry is asking for

The Pakistan Solar Association has asked for panels and inverters to be taxed once, at import or manufacture, at a reduced rate, and for import duties on batteries and inverters to be removed. These are proposals, not law.

For how budgets, rumours and the dollar move day-to-day prices, see why solar prices change in Pakistan. This page focuses on the tax itself.

How sales tax reaches your price

Sales tax on imported panels is collected at the import stage, so it is already inside the rupee price every distributor and installer pays. You do not pay it separately at the counter. What you should check is:

1. Whether a quotation is "inclusive of taxes". Two quotes can differ simply because one includes tax on services or delivery and the other does not.
2. Whether you need a sales tax invoice. A registered business that wants to claim input tax needs a proper invoice from a registered supplier, showing the tax.
3. Whether equipment is genuine and properly imported. Smuggled or under-declared goods may look cheaper but bring warranty and quality risks.

Our quotation comparison guide and solar contract checklist show where taxes should appear in the paperwork.

What a 10% tax means in rupees: example arithmetic

Round illustrative numbers only. Suppose the pre-tax cost of the panels in a home system were Rs 1,000,000. A 10% sales tax adds Rs 100,000; an 18% rate would have added Rs 180,000. If panels are about half of the total system cost, the 8-point difference between 10% and 18% would change the whole system price by roughly 4%. Current panel rates are on our solar panel price page; compare them with our price per watt guide.

Inverters and batteries

Inverters and batteries are taxed under different headings from panels. Business Recorder reported in March 2026 that inverters carried 18% GST while panels carried 10%, and the industry has complained that the different rates make pricing and compliance more complex. Batteries face sales tax and import duties too; the 2025-26 budget also proposed removing duties on raw materials for local lithium battery manufacturing.

For today's equipment rates, see solar inverter prices and lithium battery prices.

Tax treatment for businesses

Homeowners usually just pay the tax-inclusive price. Businesses have more to consider. Always confirm these points with your tax adviser for your own case.

Input tax adjustment

A business registered for sales tax may be able to claim the sales tax on solar equipment as input tax if the plant is used to make taxable supplies, such as a factory producing taxable goods. Rules and restrictions apply, and the invoice must come from a registered supplier.

Tax depreciation

Under the Income Tax Ordinance, 2001, a business can deduct the cost of plant and machinery over time through tax depreciation. According to PwC's Pakistan tax summary, reviewed in August 2026:

• the normal depreciation rate for plant and machinery is 15% a year on the reducing balance;
• an initial allowance of 25% of cost is available for new plant and machinery first put to use in Pakistan in the tax year, with exclusions such as previously used assets.

A rooftop or ground-mounted solar plant used for the business would usually be treated as plant and machinery, but the classification of each item, including structures, should be confirmed.

Example arithmetic, illustrative only. If a factory installs a new solar plant costing Rs 10 million and the 25% initial allowance applies, the first-year deduction starts with Rs 2.5 million. The remaining Rs 7.5 million is then depreciated at 15% on the reducing balance, about Rs 1.125 million for that year, if both deductions apply in the first year as the PwC summary suggests. The cash value of those deductions depends on the business's tax rate and position, which is why this is a question for your adviser, not a figure to plan around.

For loans, leasing and phased funding, see our industrial solar financing guide. For how to estimate payback without hype, see solar energy cost and payback.

Should you buy before a budget?

Prices often jump before a budget on rumours of new tax, as they did in early June 2026, and then settle if the change does not happen. If a budget is only days away, waiting for the official outcome can be sensible. Beyond that, tax is only one of several things that move prices. Our guide buy solar now or wait? weighs the cost of waiting.

How Solar Works Pakistan quotes

Our quotations follow a site survey and in-house design, and name the brand, model, quantity and warranty of each main item once equipment is selected, so you can see exactly what was priced. We source equipment through Pakistani distributors. If your business needs a sales tax invoice, tell us when you request the quotation so the paperwork is set up correctly. For factory projects, see industrial and commercial solar, and for homes, typical rates are on our solar system price page.

Get today's price or a free site survey

• WhatsApp or call: 0336 666 4321
• Email: info@solarworks.pk
• Head office: Main Boulevard, Sargodha Rd, Block F FDA City, Faisalabad
• Lahore branch: 2nd Floor, Jeff Heights, Gulberg, Lahore
• Hours: 9:00 AM to 6:00 PM, daily

We serve all of Punjab, with 300+ customers served and 50+ industrial clients. Site surveys are normally free. You can also contact us online.

Frequently asked questions

What is the sales tax on solar panels in Pakistan?

Imported solar panels carry 10% sales tax, introduced in the 2025-26 budget after an 18% proposal was cut. Reports indicate the 2026-27 budget kept it at 10%. The tax is already included in market prices.

Did the 2026-27 budget increase tax on solar panels?

No. Reports before the budget suggested a rise to 18%, but on 12 June 2026 it was reported that the rate on panels was left unchanged, and in August 2026 the FBR denied that any new tax had been placed on solar.

Is there GST on solar inverters?

Yes. Inverters are taxed separately from panels, and March 2026 reporting put the rate at 18%. Batteries carry their own sales tax and import duties.

Do I pay sales tax separately when I buy solar?

Usually not. The tax is collected at import and is already inside the price. Check whether your quotation is inclusive of all taxes, especially for services and delivery.

Can my business claim back the sales tax on a solar plant?

A sales-tax-registered business that uses the plant for taxable supplies may be able to claim it as input tax, with a proper invoice from a registered supplier. Confirm with your tax adviser before relying on it.

Can a business depreciate a solar plant for income tax?

Generally yes, as plant and machinery: PwC's summary gives 15% normal depreciation on the reducing balance and a 25% initial allowance for new assets. Confirm the classification and your eligibility with your tax adviser.

Is this tax advice?

No. Tax rules change with each Finance Act and FBR notification. Use this guide to ask the right questions, and confirm the details with FBR or a qualified adviser.

Sources

1. ARY News, "Solar panels' tax reduced from 18% to 10%: Finance Minister" (21 June 2025): https://arynews.tv/solar-panels-tax-reduced-from-18-to-10-finance-minister
2. ARY News, "Govt incentivizes local manufacturing of solar panels in budget" (11 June 2025)
3. Business Recorder, PSA proposal on sales tax on panels and inverters (29 March 2026)
4. pv magazine, "Pakistan targets solar sector with higher sales tax on modules, increased duties on batteries and inverters" (10 June 2026)
5. ESS News, "Pakistan budget threatens higher duties on batteries and inverters" (10 June 2026)
6. Daily Times, "Budget 2026-27 brings solar tax stability" (12 June 2026)
7. KPMG Pakistan, "A brief on Finance Act 2026" (July 2026)
8. The Pakistan Connect, "No new tax imposed on solar energy sector, says FBR" (2 August 2026)
9. PwC Worldwide Tax Summaries, Pakistan, Corporate: Deductions (reviewed 24 August 2026): https://taxsummaries.pwc.com/pakistan/corporate/deductions