Solar prices are expected to rise following the proposed 18% General Sales Tax (GST) introduced by the International Monetary Fund (IMF) in advance of the upcoming federal budget.
This proposal is part of a wider reform initiative aimed at enhancing tax revenues, with discussions among officials regarding the elimination of exemptions for solar users and other sectors to achieve a tax target exceeding Rs15.6 trillion.
If enacted, it could lead to increased prices for solar installations for households and businesses that are already seeking renewable energy solutions to mitigate escalating electricity expenses.
The global financial institution has outlined several significant demands prior to the 2026–27 federal budget.
Among these is a suggestion to elevate the tax collection target by more than Rs1.6 trillion, establishing the new goal at over Rs15.6 trillion.
The IMF is urging Pakistan to implement an 18% GST on fuel, including petrol, despite the current GST rate on petroleum products being zero.
If this is put into effect, it could result in a major increase in fuel prices, potentially causing a cascading effect on transportation, food costs, and everyday living expenses.
Additionally, the IMF has requested the removal of tax exemptions on newly constructed homes, which could raise the costs associated with home construction and adversely affect Pakistan’s already challenged housing market.
The strategy also includes taxing small businesses and traders based on their assets, which could broaden the tax base but also intensify financial strain on smaller enterprises.
Shift towards solar energy increases savings on fuel imports
A report by UK-based energy think tank Ember shows that solar power generation in the country has expanded sharply, rising from 7.7 terawatt hours in 2022 to 36.6 terawatt hours in 2025.
This marks an average annual growth rate of around 68 percent, reflecting how quickly households and businesses are turning to solar solutions.
Read more: Solar boom helps Pakistan save $12bn on LNG imports
