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The government is considering new taxes on solar panels and internet services in consultation with the International Monetary Fund (IMF) to meet revenue targets if tax collections fall short in the ongoing fiscal year. The move follows the rejection of earlier proposals to increase taxes on fertilizers and agricultural pesticides.
These potential “emergency tax measures” are expected to be detailed in the IMF’s upcoming second review report, which will be released after the Fund’s Executive Board approves the disbursement of a $1 billion tranche. The measures would only be implemented if revenue shortfalls in the first half of the fiscal year (July–December) exceed agreed thresholds or if the Ministry of Finance fails to control expenditures.
As per proposals shared by the Federal Board of Revenue (FBR) with the IMF, the government could raise the General Sales Tax (GST) on imported solar panels from 10% to 18% starting January 2026, if required. The plan also includes the possibility of increasing the withholding tax on internet services from 15% to as high as 18% or 20%.
FBR estimates suggest that imported solar panels could contribute 25,000 to 30,000 megawatts of electricity generation capacity in the coming years. Currently, rooftop solar systems generate about 6,000 megawatts, a figure expected to rise rapidly. Officials said the government is also reviewing ways to manage the expanding solar sector, as declining dependence on the national grid is contributing to higher capacity payments, projected to reach Rs1.7 trillion this fiscal year.
