Pakistan government proposes higher GST on solar panels and hybrid cars

The federal budget plan in Pakistan is expected to raise the General Sales Tax (GST) on solar panels from 10 % to 18 %, making residential solar systems noticeably more expensive. The same proposal would increase GST on hybrid electric vehicles: models up to 1 800 cc would see the rate rise from 8.5 % to 18 %, while larger hybrids would face a jump from 12.75 % to 25 %. In addition, the budget outlines a possible Rs 830 billion allocation for power subsidies aimed at reducing circular debt and supporting distribution companies such as K‑Electric. Officials also indicated work on a New Energy Vehicle policy to encourage local manufacturing and assembly of green‑energy vehicles, despite the higher tax burden on consumers.

Analysts warn that the higher taxes could slow the adoption of clean‑energy technologies and raise costs for environmentally friendly transport, even as the government seeks to boost revenue and address the electricity sector’s financial strain.