The government has proposed 18% sales tax (GST) on imported solar panels and related equipment, aimed at Rs. 20 billion in revenue. This step is part of the 2025-26 budget plan and will be applicable to solar imports of more than Rs. 110 billion. However, critics are concerned that it can slow down Pakistan’s change towards solar energy, gaining popularity as an increase in electricity prices.
Why is the government doing this?
Finance Minister Muhammad Aurangzeb says that taxes will create a level of sports grounds – taxes are already imposed on locally produced solar panels, while there were no imported people. The government hopes that it will promote local manufacturing and bring it to very important revenue. This decision also aligns with IMF-backed economic reforms, as the rising cost of electricity and increasing demand for affordable energy solutions in Pakistan.
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Rapid growth of solar energy in Pakistan
Solar Power has tripled its share of Pakistan’s power mixture since 2021 – today only 4% to 14%. It is now the third largest power source in the country, providing a cheap and cleaner option for expensive grid electricity.
Critics warned of negative effects:
Opponents argue that taxing on solar imports can be a backfire:
- Higher costs for homes and businesses switching on solar
- Slow adoption of clean energy, keeping people dependent on expensive fossil fuels
- Missed environmental target, because solar helps cut carbon emissions
Many experts believe that the government should support solar energy instead of levying this tax, making electricity bills more accessible to reduce and fight climate change.
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