The federal government is considering major tax changes for solar energy equipment and hybrid vehicles in the upcoming budget, potentially making both significantly more expensive for consumers.
According to budget proposals under review, GST on imported solar panels may be raised from 10% to 18%. The increase is expected to slow the rapid shift toward solar energy as more households and businesses move away from the national power grid due to rising electricity costs.
Industry analysts believe higher taxes on solar equipment could indirectly support power producers by reducing the pace of migration from conventional electricity.
The government is also reviewing higher GST rates for hybrid electric vehicles. Under the proposal, hybrid vehicles up to 1800cc could face GST of 18%, up from the current 8.5%, while taxes on larger hybrid vehicles may increase from 12.75% to 25%.
At the same time, officials are discussing a broader New Energy Vehicle policy focused on encouraging local manufacturing and assembly of cleaner vehicles in Pakistan.
The budget proposals also include around Rs830 billion in electricity subsidies to help manage circular debt and tariff adjustments, including financial support for distribution companies and K-Electric.
The proposed measures indicate the government is trying to increase revenue while managing the energy sector’s financial pressures, though the changes could make clean energy and hybrid transport less affordable for consumers.
