Speaking in the National Assembly, he said that the digital sales tax on services would remain within the jurisdiction of provinces.
Dar stated that after detailed discussions with coalition partners and relevant stakeholders, consensus had been reached on resolving several contentious budgetary issues. As part of the revisions, it was agreed that the imposition of digital sales tax on services falls under the constitutional domain of provincial governments.
“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,” he said.
Dar further clarified that the earlier proposal of imposing 18% General Sales Tax (GST) on solar panels had sparked considerable debate. Upon review, it was revealed that 54% of components used in solarization were already taxed under the existing regime, and the 18% tax applied only to the remaining 46%. However, after mutual consultations, we have now proposed reducing the solar GST from 18% to 10%, he announced.
He emphasized that tax proposals are essential for revenue generation, and any relief in one area necessitates compensation elsewhere. He pointed out that when the cabinet found the initial proposal of a 6% salary increase for government employees insufficient and raised it to 10%, corresponding budgetary adjustments also had to be made.
“We must move forward collectively. Our approach is rooted in consensus and cooperation,” he said.
Highlighting another key issue, Dar said it was decided to maintain funding for a proposed university in Sindh under the Public Sector Development Programme (PSDP) at Rs 4.7 billion through the Higher Education Commission (HEC).
He also acknowledged valid concerns raised by MNAs regarding the closure of the Public Works Department (PWD) and confirmed that the Pakistan Infrastructure Development Company Limited (PIDCL) would now oversee all federal development projects across provinces. He said, while PIDCL was initially formed for Sindh, its mandate has now been expanded to oversee development projects across all provinces.
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He concluded by reaffirming the government’s willingness to address genuine concerns through mutual dialogue and constructive engagement.
