Solar Panels and EVs May Get Massively More Expensive in Budget 2026-27

Solar panels, electric vehicles, and hybrid vehicles could become more expensive under the FY2026-27 budget as the government reviews tax proposals aimed at increasing revenue collection.

According to media reports, discussions are underway on a range of tax measures, with the International Monetary Fund (IMF) reportedly opposing new tax exemptions and advocating broader taxation across sectors.

One proposal under consideration would increase the General Sales Tax (GST) on electric vehicles from 1 percent to 18 percent. A similar proposal would raise the GST rate on hybrid vehicles from 8 percent to 18 percent.

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The government is also reviewing a proposal to increase GST on solar panels from 10 percent to 18 percent. If approved, the move could increase the cost of solar installations for households and businesses at a time when demand for alternative energy solutions has been growing rapidly.

The proposed tax changes could affect a wide range of electric vehicles, including electric cars, motorcycles, rickshaws, buses, trucks, pickup vehicles, tractors, and double-cabin vehicles.

The discussions come as policymakers work to finalize the federal budget while balancing revenue targets agreed with the IMF and efforts to support economic growth.

Meanwhile, the textile industry has renewed its demand for the release of Rs. 327 billion in pending refunds and called for reductions in electricity and gas tariffs to improve competitiveness.

Exporters are also seeking broader tax relief measures. Reports indicate that the government is considering abolishing the 1 percent advance tax on exports, a move that could provide approximately Rs. 100 billion in relief to the export sector. However, sources suggest that no major relief package for exporters is currently under consideration.

The federal budget for FY2026-27 is expected to be presented next week and will outline the government’s taxation, spending, and revenue strategy for the coming fiscal year.