Islamabad: The federal government is expected to introduce a sales tax of up to 25 percent on imported electric vehicles (EVs) in the upcoming Budget 2026-27, while maintaining the current tax structure for hybrid electric vehicles (HEVs).
According to sources, several sales tax exemptions available to the electric vehicle sector are set to expire on June 30, 2026. Among the key incentives ending is the sales tax exemption on the import of completely knocked down (CKD) kits used by local manufacturers for assembling electric vehicles.
The existing exemption currently covers small electric cars and sport utility vehicles (SUVs) equipped with battery capacities of up to 50 kWh, as well as light commercial vehicles (LCVs) with battery capacities of up to 150 kWh.
Industry sources revealed that locally manufactured or assembled four-wheeler EVs currently enjoy a reduced sales tax rate of just 1 percent until June 30, 2026. This concession applies to eligible small cars, SUVs, and LCVs that fall within the prescribed battery capacity limits.
In contrast, locally produced hybrid electric vehicles continue to benefit from reduced sales tax rates ranging between 8.5 percent and 12.75 percent. Officials indicate that these tax rates are likely to remain unchanged during the next fiscal year, providing stability for Pakistan’s growing hybrid vehicle market.
The proposed tax changes come as the government reviews incentives under its broader fiscal and industrial policy framework. The move could significantly impact the affordability of imported EVs and influence consumer demand in Pakistan’s emerging electric vehicle sector.
Separately, the Senate Standing Committee on Finance has approved the Customs (Amendment) Bill, 2026, which seeks to implement financial measures outlined in the Automotive Industry Development and Export Policy (AIDEP) 2021-26. The committee unanimously endorsed the bill following detailed discussions.
The upcoming federal budget is expected to provide greater clarity on the future taxation framework for electric and hybrid vehicles, as Pakistan continues its transition toward cleaner and more sustainable transportation solutions.
