ISLAMABAD – Solar energy in Pakistan witnessed a boom in recent years as high electricity costs and unreliable supply are driving Pakistanis to adopt solar energy, but price of solar setup is likely to get up as the federal government plans to impose an 18% sales tax on imported solar panels in the upcoming budget for FY2025-26.
This comes at a time when the Pakistani government is already considering slashing the buyback rates for net-metered solar users—a double blow to solar adoption.
According to sources within tax authorities, the proposed tax is part of larger fiscal plan aimed at generating nearly Rs. 200 billion in new revenue. The move is intended to meet International Monetary Fund (IMF) demands for a broader tax base but has triggered concerns within the renewable energy sector.
If implemented, the 18% tax will significantly increase the upfront cost of solar installations for households and businesses. Combined with lower compensation for surplus electricity sent to the grid under net metering, the financial viability of switching to solar is expected to take a hit.
Solar Price Update in Pakistan
The tax is part of the broader Finance Bill 2025-26, which also includes plans to withdraw exemptions under the Sixth and Eighth Schedules of the Sales Tax Act. Although some essential medical items are expected to be added to the exemption list, solar imports will likely not be spared.
These changes could slow down country’s transition to renewable energy, especially at a time when electricity costs are rising and climate-related challenges are intensifying.
The full budget is expected to be announced later this month. Stakeholders from the solar and environmental sectors are urging the government to reconsider policies that could undermine long-term sustainability goals.
Solar Net Metering Rates
Pakistani government is planning stern regulations for solar net metering users after its initial plan faced opposition. The revised policy will replace net metering with net billing, removing the zero-bill benefit and reducing the buyback rate for excess electricity from Rs 27 to Rs 10 per unit.
Consumers will receive monthly cash payments instead of quarterly credits. The policy applies to all consumer types and shortens license contracts from seven to five years. These changes encourage the use of hybrid solar systems with lithium batteries, which may increase import costs by $1 billion annually.
1KW, 3kW, 5kW Full Solar System Rates in Pakistan May 2025 Update
