BAD NEWS! Solar Panel Prices Going to Increase by 20% – Demanded by IMF

The Government of Pakistan is planning to introduce an 18% General Sales Tax (GST) on solar panels and related equipment in the upcoming 2025–26 federal budget. This move comes as part of recommendations made by the International Monetary Fund (IMF), which has advised Pakistan to remove tax exemptions in order to increase government revenue and control the fiscal deficit.

Why Is the IMF Pushing for This Tax?

In its ongoing budget negotiations with Pakistan, the IMF has urged the government to:

• Impose an 18% GST on imported solar panels.
• Apply a 1.5% withholding tax on most imported items, with only a few exemptions for industrial raw materials.

The main aim is to boost tax collection and strengthen the country’s financial position.

Concerns About the Solar Industry

This proposed tax has raised serious concerns in Pakistan’s solar energy sector. Experts believe that if these exemptions are removed:

• Solar systems will become more expensive.
• Households and small businesses might not be able to afford solar energy.
• Growth in the renewable energy sector may slow down.
• Investment in clean energy projects could decrease.

What Is the Government Saying?

So far, the government has not officially announced the tax. Rashid Mahmood Langrial, Chairman of the Federal Board of Revenue (FBR), confirmed that the idea of removing the GST exemption on solar panels is being considered. However, no final decision has been made yet.

When Will the Final Decision Be Made?

The government will reveal its final decision in the 2025–26 federal budget, which is expected to be presented on June 10, 2025. The authorities aim to create a budget that balances economic needs with the promotion of green energy.

Final Thoughts

As Pakistan finalizes its next budget, the proposed 18% GST on solar panels remains a hot topic. While the IMF sees it as a step to improve the country’s economy, many worry it could slow down Pakistan’s progress in renewable energy and hurt affordability for everyday people. All eyes are now on the government’s budget announcement in early June 2025.