The federal government is considering a significant increase in taxes on solar panels in the upcoming Budget 2026-27, a move that could raise installation costs for households and businesses shifting away from grid electricity.
According to budget proposals under review, the General Sales Tax (GST) on solar panels may be increased from 10% to 18%. If approved, the measure would make imported solar equipment more expensive at a time when rooftop solar adoption is rising rapidly across Pakistan due to high electricity prices and persistent load pressures.
Officials believe the higher tax could slow the migration of consumers from the national grid to private solar systems, helping stabilize electricity demand for the country’s power sector and Independent Power Producers (IPPs).
At the same time, the government is expected to continue its industrial surplus electricity package, which allows industries to purchase excess grid electricity at concessional rates.
The policy is aimed at increasing industrial consumption of surplus power generation while improving utilization of the national grid. Authorities expect the package to support industrial activity and ease pressure on the power sector’s capacity payments burden.
Analysts say the proposed solar tax increase and continuation of discounted industrial electricity indicate a broader strategy to retain consumers on the national grid and improve revenues within the struggling power sector ahead of the new fiscal year.
