The federal government is preparing a package to impose a 10-19.5 percent carbon levy on vehicles above 2,000cc to discourage fuel-heavy transport.
The government is also designing a package of incentives for locally manufactured electric vehicles, including reducing customs duty on EV batteries, electric motors, and related components to as low as 1 percent, while keeping sales tax on EV parts at just 1 percent.
Officials are also considering broad tax exemptions for electric vehicles, including potential relief from federal excise duty, capital value tax, and withholding tax, in a bid to lower upfront costs and attract both investors and consumers to the domestic EV market.
The policy also suggests that hybrid vehicles may not receive similar tax concessions, as policymakers appear to be prioritizing full electric mobility over hybrid technology in the long-term transport strategy.
A high-level committee chaired by Deputy Prime Minister Ishaq Dar is currently reviewing the proposals before their possible inclusion in the federal budget.
The carbon levy on large vehicles could generate over Rs. 142 crore within five years while also supporting environmental objectives.