The cost of setting up solar power systems in Pakistan is likely to increase significantly as the government plans to raise taxes on solar panels in the upcoming federal budget 2026–27.
Sources say the International Monetary Fund (IMF) has opposed tax exemptions that mainly benefit wealthy groups and has asked Pakistan to withdraw them. The IMF has also classified solar panels, electric vehicles, and hybrid vehicles as luxury items used mostly by affluent people.
In line with IMF conditions, the government is considering raising sales tax on solar panels from 10% to 18% in the new budget. This 8% increase could raise installation costs and make solar energy less affordable for many consumers.
Officials are currently negotiating with the IMF for a new long-term bailout program. Sources say Pakistan’s economic situation and IMF conditions are pushing the government to widen the tax base and remove subsidies.
The possible tax hike comes at a time when many middle-class families are turning to solar energy to reduce high electricity bills. Experts warn that the move could slow down Pakistan’s shift toward renewable energy.
