ISLAMABAD: Electric and hybrid vehicles in Pakistan may become significantly more expensive as the government considers ending tax exemptions and raising sales tax rates in the upcoming federal budget 2026-27.
According to sources in the Ministry of Industries and Production, the International Monetary Fund (IMF) has rejected requests to maintain existing tax relief on hybrid and electric vehicles, prompting preparations to impose a uniform 18 percent sales tax on these categories in the next fiscal year’s budget.
At present, electric vehicles are taxed at a concessional rate of 1pc, while hybrid vehicles benefit from an 8pc reduced sales tax.
Under the proposed changes, both categories could be brought to the standard 18pc rate. Solar panels are also reportedly under consideration for an increase in sales tax from 10pc to 18pc.
Officials suggested that removing these exemptions would lead to higher prices for imported and locally available hybrid and electric vehicles.
During the previous fiscal year, approximately 45,000 vehicles were imported, while estimates for the current fiscal year suggest imports may fall to around 40,000 units.
Data indicated that nearly 38,000 vehicles were imported between July and April of the current fiscal year, highlighting steady demand despite rising costs and policy uncertainty.
