Renewables boost: federal govt halts 16pc GST on solar power

ISLAMABAD: The federal government has temporarily suspended the 16 per cent general sales tax (GST) previously imposed on electricity generated through solar systems. The decision came as a major, albeit temporary, relief for households and businesses using solar power.

The decision follows the approval of a review petition filed by solar consumers, prompting President Asif Ali Zardari to intervene. The President accepted the appeal related to the tax and referred the case back to the Federal Tax Ombudsman (FTO) for a fresh, detailed examination.

The tax was originally enforced after all electricity distribution companies jointly challenged an earlier ruling by the FTO. Their appeal led to the imposition of GST on solar users, a move that drew widespread criticism from consumers who said the added cost placed an undue financial burden on households already struggling with high electricity prices.

The FTO had issued a tax recovery order in February, but growing public concern and renewed objections from solar consumers pushed the matter back into review. Earlier this month, the President approved the review petition, clearing the way for the suspension of the tax and ordering a new hearing to reassess its implementation.

For now, the suspension offers temporary relief to thousands of solar users across the country, while the FTO prepares to re-evaluate the case.

Pakistan’s transition to renewable energy continues to gain momentum, with rooftop solar emerging as a significant contributor to the national power mix. Earlier this month, a research report showed that net metering generation, excluding K-Electric consumers, had more than doubled in the past year, rising to 142.67 GWh in September 2025, from 70.35 GWh in September 2024.

A growing shift is being seen among households and businesses toward solar installations to reduce energy costs and dependence on the grid. As a result, solar’s share in total electricity generation has also expanded from 0.6 per cent last September to 1.1 per cent this year.