Solar credit

To encourage installation of solar systems, the United States Congress had approved tax credit on installation of solar systems about a decade back. Known as the federal solar tax credit or investment tax credit (ITC), it allows you to deduct 30 percent of the cost of installing a solar energy system from your federal taxes. The ITC applies to both residential and commercial systems, and there is no cap on its value. Thanks to the ITC, the number of users of solar systems in the US have increased significantly as it not only provides tax benefits but also reduction in energy charges.

Both in the US and in Europe, there are companies which install solar systems free of cost/lease on clients’ premises. Under the arrangement, the user is allowed use of a certain amount of electricity and the remainder is sold by the installer to the grid to recover his cost. Unfortunately, governments in Pakistan have not done much to encourage use of solar systems although we needed it more not only because of because of energy shortages but also because of suitable weather conditions. If the government promulgates such a tax rebate incentive either through parliament or through a presidential ordinance immediately, it will not only assist in reducing the energy shortage but may encourage some individuals to join the tax net. Efforts should also be made to start manufacture of solar panels and associated equipment in the country to reduce costs.

Fayyaz ur Rehman

Islamabad