The Federal Budget for 2025–26, announced by Finance Minister Muhammad Aurangzeb, is attracting attention due to a series of new taxes, particularly on high-end products. The tax scope is expanding to include luxury items and clean energy imports.
One of the most discussed measures is an 18% tax on imported solar panels. This decision is expected to increase prices and spark significant debate. In his speech to the National Assembly, Aurangzeb defended the tax, stating that it aims to support Pakistan’s local solar industry. However, critics are concerned that this move may hinder the transition to more affordable renewable energy sources.
The development comes during a solar boom in Pakistan, with the net metering capacity rising to 2,813 megawatts (MW) as of March 31, 2025, according to the Pakistan Economic Survey 2024-25 released on Monday.
In addition to solar panels, taxes have also been imposed on various other items, making them more expensive. These items include:
- Vehicles
- Petroleum products
- Juices
- Beverages
- Carbonated water
- Mineral water
- Pet food (including for dogs and cats)
- Coffee
- Chocolates
- Cereal bars
Furthermore, a 2% tax is proposed on the sale of online items, which will also lead to increased prices.
The new budget, presented in the National Assembly, has a total outlay of Rs 17.57 trillion, sets a GDP growth target of 4.2%, and announces relief measures for the salaried class, while overall federal expenditure has been reduced by 7%.