The government is likely to impose up to 25 percent sales tax on the import of electric vehicles (EVs) in the upcoming budget, while tax rates on hybrid vehicles are expected to remain unchanged in the next fiscal year.
According to details, a number of sales tax exemptions related to EVs are set to expire on June 30, 2026. Under the current framework, the exemption on the import of completely knocked down (CKD) kits for electric vehicles by local manufacturers will lapse on that date.
At present, this exemption applies to small cars and SUVs with battery capacities of up to 50 kWh, as well as light commercial vehicles (LCVs) with battery capacities of up to 150 kWh.
Sources told ProPakistani that a 1 percent sales tax is currently applicable on locally manufactured or assembled four-wheeler EVs until June 30, 2026, including eligible small cars, SUVs, and LCVs falling within the approved battery limits.
In contrast, locally manufactured hybrid electric vehicles are currently subject to a reduced sales tax ranging from 8.5 percent to 12.75 percent, and these rates are expected to remain unchanged in the next fiscal year.
Meanwhile, the Senate Standing Committee on Finance approved the Customs (Amendment) Bill, 2026, aimed at implementing the financial provisions of the Automotive Industry Development and Export Policy (AIDEP) 2021-26. The committee unanimously recommended the bill after detailed deliberations.
The government has also proposed amendments to extend customs duty concessions on the import of EV parts and components until June 30, 2026, in a bid to support green transportation and encourage local EV manufacturing in Pakistan.
The original EV policy, approved by the federal cabinet on June 16, 2020, allowed concessional customs duty for five years from July 1, 2020 on imports of EV-specific parts for electric two- and three-wheelers, conditional imports of new electric two- and three-wheelers in completely built-up (CBU) form by manufacturers, and components for electric heavy commercial vehicles such as trucks, buses, and prime movers.
These concessions were incorporated through the Finance Act, 2020 in Part-V(A) of the Fifth Schedule to the Customs Act, 1969.
Later, under AIDEP 2021-26, approved on December 21, 2021, the federal cabinet extended the concessions for electric two- and three-wheelers and electric heavy commercial vehicles until June 30, 2026. The policy also expanded the concessions to cover EV-specific parts for LCVs and vans on the same basis as other four-wheelers.
Officials said the latest amendment is intended to align the concessions available under AIDEP 2021-26 with those listed in the Fifth Schedule of the Customs Act.
As part of the Customs (Amendment) Bill, 2026, the government has also extended customs duty concessions on the import of completely built electric vehicles (CBUs) until June 30, 2026. The concession will apply to up to 10 units of the same variant to be locally assembled or manufactured, with a maximum cap of 200 units for the two- and three-wheeler segments.
