The federal government has announced a new plan to raise Rs20 billion in tax revenue by introducing an 18% General Sales Tax (GST) on imported solar panels and photovoltaic cells. This proposal is part of the national budget for the financial year 2025-26. The new tax is expected to affect solar equipment imports worth more than Rs110 billion. However, many people are concerned that it might slow down the growing trend of solar energy adoption in Pakistan.
Finance Minister Muhammad Aurangzeb explained that the purpose of this tax is to create a fairer system by treating both imported and locally produced solar panels the same. At present, locally assembled solar panels are already taxed, while imported ones were not. The government also hopes that this move will encourage people to support local manufacturers. This step is part of a wider effort to carry out economic reforms backed by the International Monetary Fund (IMF), especially during a time when electricity prices are rising and more people are turning to solar energy to reduce their power bills.
Over the last few years, solar energy has grown rapidly in Pakistan. In 2021, it made up only 4% of the country’s electricity supply. Today, that number has increased to 14%, making solar power the third-largest source of electricity in the country. This growth has given hope to many citizens looking for affordable and clean alternatives to expensive grid electricity.
However, critics argue that placing a heavy tax on solar imports could hurt the clean energy sector. They fear it may discourage people from switching to solar power and increase the financial burden on households already struggling with high electricity costs. Many experts believe that instead of taxing solar products, the government should be making clean energy more accessible to reduce dependence on costly fossil fuels and support long-term environmental goals.
