Pakistan is likely to introduce a higher Sales Tax on imported electric vehicles (EVs) in the upcoming federal budget. According to reports, the government may impose up to 25 percent Sales Tax on EV imports from the next fiscal year. However, tax rates on hybrid vehicles are expected to remain unchanged.
The proposed change comes as several tax exemptions related to electric vehicles are set to expire on June 30, 2026. One major exemption applies to the import of completely knocked down (CKD) kits used by local EV manufacturers. This concession is currently available for small electric cars and SUVs with battery capacities of up to 50 kWh. It also covers light commercial vehicles (LCVs) with battery capacities of up to 150 kWh.
At present, locally manufactured or assembled four-wheeler EVs benefit from a reduced Sales Tax rate of just 1 percent. This concession remains valid until June 30, 2026. The reduced rate applies to eligible small cars, SUVs, and LCVs that meet the approved battery capacity limits.
In comparison, locally assembled hybrid electric vehicles currently face a Sales Tax ranging from 8.5 percent to 12.75 percent. Sources indicate that these rates are likely to stay the same during the next fiscal year.
Meanwhile, the Senate Standing Committee on Finance has approved the Customs (Amendment) Bill, 2026. The bill aims to implement financial measures under the Automotive Industry Development and Export Policy (AIDEP) 2021-26. The committee unanimously supported the proposal after detailed discussions.
The government has also proposed extending customs duty concessions on EV parts and components until June 30, 2026. The move is intended to encourage environmentally friendly transportation and support the growth of local EV manufacturing.
Pakistan’s original EV policy was approved by the federal cabinet on June 16, 2020. It introduced reduced customs duties on EV-specific parts and components for electric two-wheelers, three-wheelers, and heavy commercial vehicles. These incentives were later incorporated into the Finance Act, 2020.
In December 2021, the federal cabinet approved AIDEP 2021-26 and extended these concessions until June 30, 2026. The policy also expanded benefits to include EV-specific parts for vans and light commercial vehicles.
Officials said the latest amendments are designed to align customs concessions under AIDEP with provisions listed in the Fifth Schedule of the Customs Act, 1969.
The Customs (Amendment) Bill, 2026 also extends customs duty concessions on completely built electric vehicles (CBUs) until June 30, 2026. The concession will apply to up to 10 units of the same variant for local assembly or manufacturing. For electric two- and three-wheelers, the maximum limit has been set at 200 units.
In other news read more about Punjab Approves ‘One Map Punjab’ Project Worth Rs1.46 Billion
The proposed measures reflect the government’s effort to balance revenue generation with support for Pakistan’s growing electric vehicle sector.
