Pakistan Solar Association demands govt reconsider proposed GST on solar panels

LAHORE: The Pakistan Solar Association (PSA) has urged the government to reconsider the proposed imposition of the 18 per cent general sales tax (GST) on imported solar panels in Budget 2025-26.

The association fears that this move could reverse the significant progress Pakistan has made in solar energy deployment over the years. The growth of the solar sector has not only provided affordable and sustainable energy options for citizens but has also played a critical role in reducing dependence on fossil fuels and minimising environmental harm.

According to a PSA official, the rationale provided for the tax -- to protect local manufacturing -- is fundamentally flawed. Currently, there is no large-scale or high-efficiency solar panel manufacturing facility in the country. The few existing units, he said, only produce low-wattage panels, which do not compete directly with imported technology. Hence, he added, the claim of protecting the local industry lacks merit and should not come at the cost of sabotaging a growing, green energy sector.

“At a time when the world is accelerating towards clean and renewable energy, this tax will discourage solar adoption and harm our climate goals,” said Waqas Moosa, chairperson of the Pakistan Solar Association. “The imposition of 18 per cent GST will make solar energy less affordable for consumers and damage the confidence of investors and stakeholders in this vital industry.”

Currently, the high cost of solar installations is already a barrier for many. Increasing prices further through taxation will make solar less competitive compared to fossil fuels such as oil and petrol -- which are not only environmentally damaging but also contribute to the country’s rising import bill and balance of payments issues.

This move risks long-term damage to Pakistan’s environmental objectives, energy independence, and economic stability, the association remarked, adding that it calls upon the government to take a holistic and forward-thinking approach, considering our climate commitments, current account challenges, and the urgent need for energy transition.

“We respectfully urge policymakers to withdraw this proposed GST in the final budget and instead support policies that encourage solar adoption, attract investment and promote clean energy growth in Pakistan,” the PSA said.