Solar panel tax likely to increase in new budget

KARACHI: The next fiscal year’s budget is likely to see an increase in tax on solar panels, which is expected to make installing solar systems in the country more expensive for the public.

According to sources, the government is considering a proposal to increase the sales tax rate on solar panels from 10 percent to 18 percent in the next budget.

If this proposal is approved, the overall cost of solar panels, inverters, and other related equipment may increase significantly, which will directly impact domestic consumers and small businesses.

Sources say that the International Monetary Fund has increased pressure on the government to end tax concessions in various sectors.

The IMF has taken the position that tax exemptions on certain items in the country mostly benefit the rich class, so such concessions should be reviewed.

According to sources, the IMF has also declared electric vehicles, hybrid vehicles, and solar panels as items of consumption of the relatively wealthy class, after which it has become difficult for the government to maintain tax concessions on these sectors.

Government sources say that Pakistan is currently in talks with the IMF regarding a long-term financial program, due to which measures to increase tax revenue and limit concessional exemptions can be included in the budget.

According to economic experts, increasing taxes on solar panels will make it more difficult for the public, who are worried about high electricity bills, to obtain alternative energy, while the solar industry is also likely to be affected.