Sales tax likely to be reduced on hybrid vehicles
The government plans to reduce sales tax on hybrid vehicles from 25% to 18% to promote HEVs/EVs and facilitate consumers, reversing a recent increase.
- Proposed sales tax reduction for hybrid vehicles.
- The recent increase in sales tax to 25 percent.
- Government's strategy to promote hybrid and electric vehicles.
ISLAMABAD: The government is planning to reduce sales tax from 25 percent to 18 percent on the import and local supply of hybrid vehicles.
It is learnt that a summary has been moved to the Finance Division in this regard.
The reduced rate was available till June 30, 2026 which ended automatically as no further extension has been granted through Finance Act 2026.
Furthermore, to facilitate the end consumers and promote HEVs and EVs, the government decided to take this measure.
Through Finance Act 2026, the rate was increased from 8.5 percent to 25 percent. The government has realized the impact of this higher 25 percent sales tax on hybrid vehicles and expected to decrease the same following approval of the federal cabinet.
Presently, higher rate of 25 percent sales tax is applicable on the import and local supply of hybrid vehicles from July 1, 2026.
Following the expiry of sales tax exemption on the import of hybrid vehicles on June 30, 2026, sales tax is applicable on these vehicles from July 1. After withdrawal of exemption, the vehicles have been shifted to Schedule-II of the SRO 297(I)/2023 to impose 25 percent sales tax on these vehicles.
Copyright Business Recorder, 2026
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