Previous EV Tax Concessions Also Ended

The hybrid vehicle tax change follows the expiry of several incentives previously available to Pakistan's electric vehicle sector.

Among the concessions that ended were tax exemptions on the import of Completely Knocked Down (CKD) kits used by local electric vehicle manufacturers.

Previously, reduced taxation applied to:

Vehicle Category	Previous Concession
Locally assembled EVs	1% sales tax
Small EVs (up to 50 kWh battery)	Reduced tax
Electric SUVs (up to 50 kWh battery)	Reduced tax
Light Commercial EVs (up to 150 kWh battery)	Reduced tax

Pakistan Market Perspective

According to CarAdvisers' market analysis, the removal of tax concessions is expected to reshape buying decisions in Pakistan's electrified vehicle segment.

Hybrid vehicles have become increasingly popular among buyers seeking improved fuel efficiency without relying on charging infrastructure. However, higher taxation may narrow the price gap between hybrids and conventional petrol vehicles, making affordability a greater concern for many consumers.

Manufacturers offering locally assembled hybrid models could also review pricing strategies in response to the revised tax structure.

Source: CarAdvisers Data Analytics

What Should Buyers Know?

If you're planning to purchase a hybrid vehicle in Pakistan, consider the following:

Confirm the latest ex-factory price with authorized dealerships.
Check whether your preferred model has already been repriced.
Compare hybrid, petrol, and fully electric alternatives before making a purchase.
Monitor future policy announcements that may affect vehicle taxation.

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Frequently Asked Questions

Does the new 25% sales tax apply to imported hybrid vehicles?

Yes. The 25% sales tax applies to imported as well as locally supplied hybrid vehicles from July 1, 2026.

Why was the tax introduced?

The previous sales tax exemption expired on June 30, 2026, and hybrid vehicles were subsequently moved to Schedule II of SRO 297(I)/2023 under the Finance Act 2026-27.

Will hybrid vehicle prices increase?

Higher taxation is expected to increase the final retail price of many hybrid vehicles, although the exact impact will vary by manufacturer and model.

Does this affect fully electric vehicles?

The Finance Act 2026-27 also brought changes to several EV-related tax concessions, including the expiry of incentives covering certain locally assembled electric vehicles and CKD kit imports.

Final Verdict

The introduction of a 25% sales tax on hybrid vehicles marks a significant policy shift for Pakistan's automotive sector. While the measure may increase government revenue, it is also expected to raise purchase costs for consumers and influence demand for hybrid technology.

From CarAdvisers' perspective, buyers should closely monitor revised vehicle pricing and evaluate the long-term ownership costs of hybrid, petrol, and fully electric vehicles before making their next purchase.

What do you think?

Will the new 25% sales tax discourage buyers from choosing hybrid vehicles, or will rising fuel prices continue to make hybrids an attractive option in Pakistan?

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