Overview
- Multiple late-May reports say the finance ministry and FBR are considering raising the general sales tax on solar panels from 10 percent to 18 percent and bringing electric vehicles from 1 percent and hybrids from 8 percent up to 18 percent.
- Officials and media link the proposals to negotiations with the International Monetary Fund, which has reportedly objected to targeted tax concessions and is seeking a broader, more uniform taxation structure as part of a new program.
- Industry groups and financial experts warn that an 8 percentage-point GST rise on solar panels and large increases on electric and hybrid vehicles would raise upfront costs for households and buyers and could slow rooftop solar and electric mobility uptake.
- The changes remain proposals until the federal budget is finalised; President Asif Ali Zardari has summoned Parliament for a budget session on June 5 where measures could be approved or modified.
- The debate comes as Pakistan faces fiscal strain and rising inflation, renewables capacity has reached about 8,000 MW, and other sectors such as textiles are also pressing the government for relief and refunds.