Here’s How Much Revenue Govt Expects to Generate From Tax on Solar Panels

The government is aiming to collect Rs. 20 billion in taxes during the 2025-26 fiscal year by applying an 18% General Sales Tax (GST) on imported solar panels and photovoltaic cells, according to a national daily.

This target suggests that solar imports are expected to exceed Rs. 110 billion, even as industry stakeholders raise concerns that the tax could slow the country’s growing shift toward solar energy.

Finance Minister Muhammad Aurangzeb announced the tax during his budget speech, stating it is intended to promote local solar panel manufacturing and correct imbalances in the market. He explained that imported solar panels have been exempt from tax, while domestically produced ones were not, creating unfair competition.

The minister added that the GST measure would support Pakistan’s underdeveloped solar industry and is part of a broader effort to reform the sales tax structure and ensure fairness across different sectors.

Solar power accounted for over 14% of the country’s electricity mix in 2023, up from just 4% in 2021, overtaking coal as the third-largest energy source, according to data from the UK-based think tank Ember.

Federal Board of Revenue (FBR) Chairman Rashid Langrial told lawmakers that the new tax aims to level the playing field between imported and locally assembled panels, as the latter are already taxed.

While the government views the GST as a way to boost revenues, industry representatives caution that it may discourage new solar investments, particularly among small-scale users. However, officials maintain that strong demand for solar energy will continue despite the added cost.