ISLAMABAD: The federal government is considering a significant increase in General Sales Tax (GST) on solar panels in the upcoming Budget 2026-27, a move that could raise the cost of solar energy systems across Pakistan.
According to market reports, the GST rate on solar panels may be increased from the current 10 percent to 18 percent. If approved, the measure would make imported solar equipment more expensive, potentially slowing the adoption of solar energy by households and businesses seeking relief from rising electricity costs.
Analysts believe the proposed tax increase is aimed at supporting the national power grid, which has witnessed declining electricity consumption as more urban consumers switch to solar energy solutions. Higher solar installation costs could discourage rapid migration away from grid electricity and help stabilize power demand.
Brokerage firm Topline Securities noted that the measure may improve grid utilization and provide relief to the country’s financially challenged power sector by retaining a larger consumer base within the national electricity network.
In addition to the proposed GST hike, the government is expected to continue its surplus electricity package for industrial consumers. Under the initiative, excess electricity generation capacity is offered to industries at concessional tariffs to encourage greater reliance on grid power.
The policy is intended to support industrial growth while helping absorb surplus electricity generation and improving overall efficiency in the energy sector.
If implemented, the higher GST on solar panels will take effect from July 2026 and could increase installation costs for residential and commercial consumers planning to invest in renewable energy systems.
