PSA opposes 18pc GST on imported solar panels

LAHORE: The Pakistan Solar Association (PSA) has voiced strong opposition to the proposed imposition of 18% General Sales Tax (GST) on imported solar panels, as outlined in the Federal Budget 2025–2026. In a formal representation submitted to the Ministry of Power, the PSA cautioned that the move could significantly derail Pakistan’s progress in renewable energy adoption at a critical juncture.

According to the PSA, the imposition of this tax risks reversing the positive momentum built over the past several years, which has enabled widespread access to clean, affordable energy and contributed to national energy security. The association argues that the GST will increase the upfront cost of solar installations, making the technology less affordable for households and small businesses already grappling with high electricity prices.

PSA Chairman Waqas Moosa emphasised, “At a time when the world is accelerating toward clean and renewable energy, this tax may inadvertently discourage solar adoption and undermine our collective climate and energy goals.”

The association challenged the rationale that the tax would protect local manufacturing, stating that Pakistan currently lacks a large-scale or high-efficiency solar panel manufacturing base. Local units mostly produce low-wattage panels that do not compete with imported technologies, making the protectionist impact of the tax marginal at best.

In its letter, the PSA proposed alternative solutions such as phased incentives for local solar assembly, R\&D support, and GST exemptions for residential and small-scale solar buyers to strike a balance between industrial policy and clean energy access.

The Association urged the government to reconsider the proposed GST, warning that higher costs could make solar less competitive than fossil fuels — which are not only environmentally harmful but also strain Pakistan’s foreign exchange reserves. The PSA reaffirmed its commitment to collaborate with policymakers on sustainable, forward-thinking strategies to achieve energy independence and ensure long-term energy security for Pakistan.

Copyright Business Recorder, 2025