Some of the most significant proposals in Pakistan’s upcoming budget are expected to come through targeted tax changes that could directly impact the energy, transport, and consumer sectors.
According to a budget outlook released by Topline Securities, the federal government is likely considering an increase in General Sales Tax (GST) on solar panels from 10 percent to 18 percent. The proposed move could make solar energy systems more expensive and potentially slow the growing shift from conventional electricity to solar power.
Analysts believe higher prices for solar equipment may indirectly benefit electricity producers by reducing the number of consumers moving away from the national power grid.
The automobile sector may also face major tax revisions under the new budget proposals. Reports suggest the government is planning to raise GST rates on hybrid electric vehicles to align them with standard taxation levels.
Under the proposed changes, hybrid vehicles up to 1800cc could see GST increase from 8.5 percent to 18 percent. Meanwhile, larger hybrid vehicles may face a jump in GST from 12.75 percent to 25 percent, making environmentally friendly vehicles significantly more expensive for buyers.
Despite the possible tax hikes, the government is also reportedly working on a New Energy Vehicle policy framework aimed at promoting the local manufacturing and assembly of green-energy vehicles in Pakistan.
The report further states that the government may allocate nearly Rs830 billion in power subsidies to address circular debt issues and manage electricity tariff differences. The subsidies are expected to support power distribution companies as well as K-Electric.
The expected measures suggest that the upcoming budget will focus on increasing revenue while attempting to support industrial and energy policies. However, experts believe the burden of these adjustments could ultimately fall on consumers through higher costs for clean energy solutions and environmentally friendly transport options.
Also Read: Check Solar Panel Prices In Pakistan
