Government Plans to Impose 18% Tax on Solar Panels in 2025-26 Budget
The Government of Pakistan is planning to introduce an 18% General Sales Tax (GST) on solar panels and related equipment in the upcoming 2025–26 federal budget, which will be presented on June 10, 2025. This move is part of the government’s broader effort to boost revenue and meet the conditions set by the International Monetary Fund (IMF).
Pakistan has been working with the IMF to stabilize its economy. One of the IMF’s recommendations is to remove tax exemptions, including those currently applied to solar energy products. By removing these exemptions, the government hopes to increase its tax collection and reduce the budget deficit.
Expected Impact of the 18% Tax
- Higher Prices for Solar Systems
If the 18% GST is approved, the price of solar panels and installations could go up by around 20%, making them more expensive for ordinary citizens and businesses. - Slower Adoption of Solar Energy
With higher prices, fewer people may choose to install solar energy systems, which could slow down the country’s progress toward clean and renewable energy. - Concerns from the Industry
Companies in the solar sector are worried that this tax will hurt the industry, reduce investment, and limit growth at a time when renewable energy is badly needed.
So far, the Federal Board of Revenue (FBR) has not confirmed whether the tax will be included in the final budget. However, FBR Chairman Rashid Mahmood Langrial has said that the proposal is under serious discussion, though no final decision has been made.
