ISLAMABAD – Solar panel prices and cost of internet in Pakistan are likely to increase in upcoming months as Pakistan and the International Monetary Fund (IMF) are now exploring alternative tax hikes to address potential revenue shortfall.
Reports said these proposed “emergency tax measures” will form part of the IMF’s second review report, which is expected to be issued after the Executive Board’s approval of the third tranche of a $1 billion loan.
These measures will be triggered if the revenue shortfall exceeds a certain threshold during the first half of the fiscal year (July to December), or if the Ministry of Finance is unable to reduce expenditures.
Increase in Tax on Solar Panels
One of the key proposals from the Federal Board of Revenue (FBR) to the IMF involves raising the Goods and Services Tax (GST) rate on imported solar panels from 10% to 18%, effective from January 2026.
Similarly, a proposed increase in the withholding tax on internet services, from 15% to 18-20%, is also being considered.
According to FBR estimates, solar panels imported into Pakistan could generate between 25,000 and 30,000 MW of electricity in the coming years.
Currently, rooftop solar panels are generating around 6,000 MW of electricity, with potential to double that output.
However, the government is cautious about encouraging the rapid expansion of solar energy, as it reduces dependence on the national grid, which is already facing a capacity payment burden estimated at Rs1.7 trillion for the fiscal year.
