The federal government is considering a proposal to reduce the sales tax on hybrid electric vehicles (HEVs) from 25 percent to 18 percent, a move aimed at making environmentally friendly vehicles more affordable for consumers across Pakistan.
According to reports, a summary has been submitted to the Finance Division, and the proposal will be presented to the federal cabinet for final approval. If approved, the revised tax rate will apply to both imported and locally assembled hybrid vehicles.
The proposed reduction comes after the previous concessional tax rate expired on June 30, 2026, resulting in the sales tax increasing to 25 percent from July 1. The higher tax raised vehicle prices and created uncertainty in Pakistan’s hybrid vehicle market.
Industry experts believe restoring the lower tax rate could reduce the cost of hybrid vehicles, encourage more consumers to switch to fuel-efficient transportation, and support the country’s efforts to reduce fuel consumption and carbon emissions.
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The move is also expected to provide relief to automakers and dealerships that have faced slower demand following the recent tax increase. Lower prices could help revive sales and strengthen investment in Pakistan’s growing hybrid and electric vehicle sector.
If the cabinet approves the proposal, it would mark another step toward promoting cleaner transportation and aligning Pakistan with global trends in sustainable mobility. The decision could benefit both consumers and the automotive industry while supporting the government’s long-term environmental and energy conservation goals.
