By Staff Reporter
ISLAMABAD: The government has revised its budget proposals following concerns from coalition partners and stakeholders, retaining the digital sales tax under provincial jurisdiction and lowering the proposed general sales tax (GST) on solar panels from 18% to 10%.
The revisions were announced by Deputy Prime Minister and Foreign Minister Ishaq Dar during a session of the National Assembly on Wednesday, highlighting the government’s commitment to consensus-building and addressing genuine concerns through dialogue.
Speaking on the floor of the National Assembly, Dar outlined the outcomes of detailed discussions with coalition partners and relevant stakeholders.
“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,” Dar said.
He confirmed that the digital sales tax on services would remain within the jurisdiction of provincial governments, aligning with the constitutional framework.
The proposed 18% general sales tax (GST) on solar panels, which had sparked significant debate, was also revised. “Upon review, it was revealed that 54% of components used in solarisation were already taxed under the existing regime, and the 18% tax applied only to the remaining 46%,” Dar said. “However, after mutual consultations, we have now proposed reducing the solar GST from 18% to 10%.”
He underscored that such tax proposals are critical for revenue generation, noting that any relief in one area requires adjustments elsewhere. As an example, he pointed to a recent cabinet decision to increase government employees’ salary hike from 6% to 10%, necessitating corresponding budgetary tweaks. “We must move forward collectively. Our approach is rooted in consensus and cooperation,” Dar said.
Beyond tax adjustments, Dar addressed other budgetary concerns. He confirmed that funding for proposed universities in Sindh would be maintained at Rs4.7 billion through the Higher Education Commission (HEC) under the Public Sector Development Programme (PSDP).
Additionally, responding to unease over the closure of the Public Works Department (PWD), he announced that the Pakistan Infrastructure Development Company Limited (PIDCL), originally established for Sindh, would now oversee federal development projects across all provinces. “The PIDCL’s mandate has been expanded,” Dar said, signaling a broader role for the entity.
The revisions drew praise from coalition allies. Syed Naveed Qamar, a senior leader of the Pakistan People’s Party (PPP), thanked Prime Minister Shehbaz Sharif and Dar for accommodating the party’s proposals. “We had wanted to reduce all 18% tax on solar panels but it cannot do so. After approval of the budget, a committee will be formed to discuss further reducing tax on solar panels,” Qamar said, indicating ongoing efforts to refine the policy.
He also welcomed the expansion of PIDCL’s scope beyond Sindh as a nod to PPP concerns.
The budget debate, now in its fifth day, revealed a spectrum of priorities among legislators. Members from both treasury and opposition benches pressed for measures to spur economic growth and social equity.
Dr. Zulfikar Ali Bhatti of the Pakistan Muslim League-Nawaz (PML-N) advocated for Special Agriculture Zones equipped with modern facilities and IT Facilitation Centres in rural areas to boost agriculture and youth skills.
PPP’s Zulfiqar Ali Behan called for an agricultural emergency and the removal of taxes on fertilisers, while Chaudhry Mubeen Arif Jatt of the Sunni Ittehad Council (SIC) demanded the complete withdrawal of the proposed GST on solar panels, citing farmers’ struggles with low produce prices.
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