FBR to Slap 18% Sales Tax on Solar Panels in Finance Bill 2025

The Federal Board of Revenue (FBR) has nearly finalized the Finance Bill for 2025-26 with approximately Rs. 200 billion in new taxes, sources told ProPakistani. Key proposals include the new 18 percent sales tax on the import of solar panels and on e-commerce transactions. FBR has also completed a review of items under the Sixth Schedule (exemptions) and Eighth Schedule (reduced rates) of the Sales Tax Act, with a plan to withdraw several exemptions and concessionary rates. In partial relief, some cancer-related medical equipment and lifesaving drugs are expected to be added to the tax exemption list. FBR is also planning to broaden the sales tax net for services provided within the Islamabad Capital Territory, and introduce an 18 percent sales tax on goods manufactured in the ex-tribal areas. Moreover, the Third Schedule of the Sales Tax Act, which mandates taxation based on printed retail prices, will be expanded to include more imported products like chocolates, coffee, and cereals. In terms of excise duty, FBR is considering a 5 percent excise duty on ultra-processed food products. This may cover frozen foods, chips, carbonated drinks, instant noodles, ice cream, biscuits, frozen meat, sauces, ready-made meals, and sausages. These measures are expected to be part of the fiscal year 2025-26 budget.