ISLAMABAD: Installing solar power systems in Pakistan is likely to become much more costly for consumers as the government plans a major increase in taxes on solar panels in the upcoming federal budget for 2026–27.
Sources familiar with the matter say the International Monetary Fund (IMF) has raised strong objections to long standing tax exemptions given to wealthier segments of society and has pushed for their removal. The IMF has also placed solar panels, along with electric and hybrid vehicles, in the category of luxury goods mainly used by the affluent.
Following these conditions, a proposal is being considered to raise sales tax on solar panels from 10 percent to 18 percent in the new budget. Experts caution that this 8 percent increase could significantly raise installation costs and make solar energy less affordable for people already facing high electricity prices.
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Officials say negotiations are ongoing with the IMF for a long term bailout program. They add that economic pressures and strict requirements from the lender have limited the government’s options, pushing it toward expanding taxation and reducing subsidies.
The proposed step comes at a time when many middle class households are turning to solar energy to manage rising electricity bills. Analysts warn the move could slow down the country’s shift toward cleaner energy.