ISLAMABAD – The federal government is considering increasing the tax on solar panels in the upcoming Budget 2026-27, a move that could lead to higher prices of solar systems in the country.
If approved, the proposed increase is expected to make solar panels more expensive for consumers at a time when demand for solar energy is already rising rapidly.
Many households and businesses in Pakistan have been shifting towards solar systems in an effort to reduce electricity costs amid increasing power tariffs.
While the government has also been promoting renewable energy and solar adoption, the suggested tax hike may create additional financial pressure on consumers and could slow down the pace of solarization in the country.
Proposed Tax on Solar Panels
Reports said the government is likely to increase the General Sales Tax (GST) on solar panels from existing 10 percent to 18% in upcoming budget 2026-27.
Budget 2026-27 Date
President Asif Ali Zardari has summoned the budget session of the Parliament for the fiscal year 2026–27 on June 5 (Friday).
According to the schedule, the National Assembly will meet at 5 pm, followed by the Senate session at 6 pm. The sittings have been called under Article 54(1) of the Constitution.
Meanwhile, discussions around the upcoming budget continue in parliamentary committees. Last week, the National Assembly Standing Committee on Finance and Revenue urged the Ministry of Finance’s Tax Policy Unit and the Federal Board of Revenue (FBR) to ensure that the federal budget moves beyond short-term stabilisation efforts and instead prioritises long-term structural reforms, improved fiscal governance, transparency, and inclusive economic growth.
For fiscal year 2026–27, GDP growth is projected to remain between 3.5% and 4.5%, while inflation has climbed back into double digits, reaching 10.9% year-on-year in April 2026.
Solar Generation in Pakistan
In April 2026, Finance Minister Muhammad Auganzeb said Pakistan’s growing renewable energy capacity, noting that solar generation has reached approximately 8,000 MW, which helped cushion the economy during recent external shocks.
He underscored the government’s ambition to significantly increase the share of renewables in the energy mix over the coming decade.
Muhammad Aurangzeb stated this during his participation in a high-level panel discussion at Harvard University on “Pakistan’s Economic Agenda: Stability, Reform and What Comes Next,” held as part of the Pakistan Conference 2026.
The session was moderated by Dr. Reza Baqir, former Governor of the State Bank of Pakistan, and featured distinguished panelists. The discussion brought together leading economists, policymakers, and members of the Pakistani diaspora to deliberate on Pakistan’s economic outlook, reform priorities, and long-term growth trajectory.
