PSA opposes 18% GST on solar panels in budget FY26

June 16, 2025 (MLN): The Pakistan Solar Association (PSA) has strongly opposed the proposed 18% General Sales Tax (GST) on imported solar panels, included in the Federal Budget FY2025–26.

In a formal submission to the Ministry of Power, the PSA cautioned that the tax could severely hinder Pakistan’s renewable energy transition at a crucial time.

The association stressed that such a move could undo years of progress in expanding access to clean and affordable energy, which has played a key role in strengthening national energy security, as per the press release issued.

It warned that the GST would raise the upfront cost of solar systems, making them less accessible for households and small businesses already burdened by high electricity prices.

PSA Chairman Waqas Moosa stated, “At a time when the global shift toward renewable energy is accelerating, this tax risks discouraging solar adoption and undermining our climate and energy goals.”

Challenging the justification that the tax would support local manufacturing, the PSA outlined that Pakistan lacks a large-scale or high-efficiency solar panel production industry.

Existing local units mainly produce low-wattage panels that do not compete with imported alternatives, limiting any significant protectionist benefits from the proposed tax.

Instead, the PSA recommended measures such as phased incentives for domestic solar assembly, research and development support, and GST exemptions for residential and small-scale users.

These steps, it argued, would better balance industrial policy with equitable access to clean energy.

The association urged the government to reconsider the tax proposal, warning that increased costs could make solar energy less attractive compared to fossil fuels, which not only harm the environment but also deplete Pakistan’s foreign exchange reserves.

The PSA reiterated its willingness to work with policymakers on strategies that promote sustainable energy independence and long-term security.