The Electric Vehicle (EV) and Hybrid vehicles are likely to become more expensive in the upcoming budget for the fiscal year of 2026-27.
Hybrid and electric vehicles in Pakistan could become more expensive from July if the government decides to reduce or withdraw existing tax concessions in the upcoming federal budget.
Currently, electric vehicles (EVs) are subject to a reduced General Sales Tax (GST) rate of 1%, while hybrid vehicles are taxed at 8.5%, both significantly lower than the standard GST rate of 18%. The lower tax rates have been widely credited with boosting demand for electrified vehicles in recent years.
According to reports, the International Monetary Fund (IMF) has proposed bringing GST rates on hybrid and electric vehicles closer to the standard rate as part of broader revenue-generation measures under discussion with the government.
Government officials are reportedly resisting a major increase and are seeking either to maintain the current concessions or introduce only a limited adjustment. Sources suggest a compromise rate between 12% and 14% is among the options being considered, although no final decision has been announced.
Industry observers say a significant increase in GST could lead to noticeable price hikes for several popular hybrid models, including the Hyundai Santa Fe Hybrid, Haval H6 HEV and Toyota Corolla Cross HEV.
Estimates suggest that a hybrid vehicle currently priced at Rs12 million could become approximately Rs1 million more expensive if GST rises to 18%, while a vehicle priced at Rs7.7 million could see an increase of around Rs600,000.
The impact on electric vehicles could be even greater if the GST rate is raised from 1% to 18%, although the final effect on retail prices would depend on how individual manufacturers respond.
Analysts note that automakers do not always pass the full burden of tax increases on to consumers. Some companies may absorb part of the additional cost to remain competitive, while others may choose to transfer the entire increase to buyers.
Officials have emphasised that no decision has yet been finalised. The revised tax structure, if approved, is expected to be announced when the federal budget is presented in the National Assembly on June 10, with any new measures taking effect from July 1.
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