The federal government of Pakistan has reduced the sales tax on locally manufactured hybrid electric vehicles.
As per the official notification released by the Ministry of Finance and Revenue, the sales tax has been cut for all local hybrid vehicles with engine capacities of up to 2,000cc from 25% to 18%.
The seven-percentage-point reduction takes effect immediately, according to the notification issued by the Ministry of Finance.
The move is expected to lower the cost of locally assembled hybrid vehicles and could boost demand for more fuel-efficient cars.
The tax cut is also in line with the government’s broader efforts to promote new energy vehicles and reshape the country’s automotive tax and duty structure.
The policy could benefit both consumers and local manufacturers, although the extent of any reduction in vehicle prices will depend on how automakers pass on the tax savings.
Further details on revised prices are expected from vehicle manufacturers in the coming days.
Govt to reduce hybrid vehicles taxes, duties
The federal government is also planning to reduce duties and taxes on hybrid vehicles under the proposed Auto Policy 2026–31, according to reports on Tuesday.
The final draft of the policy has been sent to Prime Minister (PM) Shehbaz Sharif for review. If it gets approved, the policy will cover the next five years from 2026 to 2031.
The draft also includes a gradual cut in duties on imported hybrid vehicles. The changes will be made in phases over the five-year period.
For hybrid vehicles with engine sizes above 1,800cc, the government has proposed a 20 per cent cut in import taxes over five years.
The duty on hybrid vehicles above 1,801cc may also fall from 50 per cent to 30 per cent during this period.
For vehicles with engines between 1,501cc and 1,800cc, the duty could also be reduced from 50 per cent to 30 per cent in phases.
The same reduction has been proposed for hybrid vehicles with engine sizes between 851cc and 1,000cc.
For hybrid vehicles with engines up to 800cc, the duty is also proposed to drop from 50 per cent to 30 per cent over five years.
