ISLAMABAD: The International Monetary Fund (IMF) has reportedly agreed to withdraw proposed sales tax increases on solar panels and stationery items following intervention by Prime Minister Shehbaz Sharif, providing relief to consumers, students, and businesses ahead of the Federal Budget 2026-27.
According to sources, the IMF accepted the government’s request to abandon plans for raising the sales tax on solar panels from 10 percent to 18 percent. The decision is expected to support the continued growth of Pakistan’s renewable energy sector and encourage greater adoption of solar power solutions across the country.
The proposed tax increase had sparked concerns among industry stakeholders, who warned that higher taxes could slow investment in solar energy projects and increase costs for households and businesses seeking alternatives to expensive grid electricity.
In another relief measure, the IMF also agreed not to proceed with the proposed increase in sales tax on stationery items. The government had requested that the existing tax rate be maintained instead of raising it to 18 percent, citing the financial burden such a move would place on students, educational institutions, and families already facing high inflation.
The decisions are being viewed as a significant achievement for the government during ongoing budget negotiations, reflecting efforts to balance fiscal reforms with public welfare considerations.
Pakistan has witnessed a rapid increase in solar energy adoption in recent years as consumers and businesses seek to reduce electricity costs and address energy supply challenges. Industry experts believe that maintaining the current tax structure will help sustain momentum in the renewable energy sector and support the country’s transition toward cleaner energy sources.
Sources further indicated that taxation related to the stock market is expected to remain unchanged in the Federal Budget 2026-27, providing stability for investors and market participants.
The government is expected to finalize remaining budget proposals in consultation with the IMF before presenting the federal budget for the next fiscal year.
