Tax on electric and hybrid vehicles in Pakistan
The rates
| Vehicle | Charge | Rate |
|---|---|---|
| Locally manufactured EV | Sales tax (Eighth Schedule) | 1% |
| Locally manufactured HEV up to 1800cc | Sales tax (Eighth Schedule) | 8.5% |
| ICE vehicle under 1300cc | NEV Adoption Levy | 1% |
| ICE vehicle 1300–1800cc | NEV Adoption Levy | 2% |
| ICE vehicle above 1800cc | NEV Adoption Levy | 3% |
| Imported CBU EV up to ~USD 75,000 | FED | Exempt |
| Imported CBU EV ~USD 75,000–110,000 | FED | 30% |
| Imported CBU EV above ~USD 110,000 | FED | 40% |
What the Finance Act 2026 actually did
The pre-budget fear was that concessional EV and hybrid sales tax would be abolished in favour of the standard 18 per cent. It was not. The Eighth Schedule concessions were extended.
What changed instead was at the premium import end. The blanket zero FED on imported completely-built-up electric cars, SUVs and pickups for personal use was replaced with a value-tiered structure. The stated reasoning was that green subsidies were not designed for buyers of high-specification European electric vehicles.
Combustion vehicles moved the other way. Imported petrol vehicles above 2000cc picked up a Special Excise Duty that offsets the customs duty reductions applied to smaller imported cars elsewhere in the Act.
We handle the computation, the minimum-tax comparison, statutory accounts and the annual filings together.
Avail our corporate tax servicesThe NEV Adoption Levy
This is the charge most buyers of ordinary petrol cars do not realise they are paying. Introduced to accelerate the shift away from combustion, it applies at 1, 2 or 3 per cent by engine capacity, on the invoice price inclusive of duties and taxes for locally manufactured and assembled vehicles, and on import value for imported ones. It reaches motorcycles, rickshaws, buses and trucks as well as cars.
It is worth understanding as the mirror image of the EV concession: the state is reducing the cost of one powertrain and raising the cost of the other from both directions at once.
Why local assembly wins on tax
The structure is consistently biased toward vehicles built here:
- 1 per cent sales tax on the locally manufactured EV itself.
- Concessional customs duty on CKD kits, with EV-specific components such as batteries, motors and controllers reported at 1 per cent, running to 30 June 2027.
- No exposure to the tiered FED that now applies to imported CBU electric vehicles.
For a buyer, the practical consequence is that a locally assembled EV and an imported equivalent can differ far more in tax than in manufacturing cost.
The two classification gaps
The published concessions name electric vehicles and hybrids. Two increasingly common powertrains do not map cleanly onto either.
- Plug-in hybrids. Eleven of the 23 models tracked for the 2026 launch wave are PHEVs. Whether a given PHEV attracts the hybrid rate, the EV rate or standard treatment is a classification question with real money attached.
- Range-extended EVs. REEV treatment was the open question through the budget cycle and was not conclusively resolved.
In both cases, ask the dealer for the sales tax rate that will appear on the invoice, in writing, before you commit. Marketing language about a vehicle being "electric" is not a tax classification.
Auto Policy 2026-31
Still draft at the date of writing, under legal vetting with the Ministry of Law and under discussion with the IMF. Reported proposals: 1 per cent on new energy vehicles, 9 per cent on hybrids, 1 per cent concessional sales tax on parts for locally produced EVs, and an environmental levy on larger engines reported at around 10 per cent for 2001–3000cc and 19.5 per cent above 3001cc. Hybrids and combustion vehicles have been reported as moving to equal treatment, meaning standard hybrids would lose their special rate.
The IMF position has been reported as preferring full standard sales tax with direct subsidies rather than concessional rates, on the basis that lower rates create distortions and cost revenue. That disagreement is why the policy has not landed.
Source check: 14 September 2026. The Eighth Schedule rates, the NEV Adoption Levy bands, the tiered FED on imported CBU EVs, the Special Excise Duty above 2000cc and the CKD concessions are drawn from published reporting and professional analysis of the Finance Act 2026 and the Finance Act 2025, and have not been verified clause by clause against the enacted statute. Threshold values are reported in both USD and PKR by different sources. Auto Policy 2026-31 content is draft as reported and is not law. Confirm the rate applied to your vehicle on the invoice, and take advice before relying on a classification for a PHEV or REEV.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
- Finance Act 2026 (FBR)
- Federal Budget 2026-27 salient features (FBR)
- Sales Tax Act 1990, amended through 30 June 2026 (FBR)
- Withholding Tax Rate Cards (FBR)
Questions people also ask
Did EVs lose the 1 per cent sales tax in the 2026 budget?
No. The rumour that the concessional rate would jump to the standard 18 per cent circulated widely before the budget and did not happen. The Eighth Schedule retained 1 per cent on locally manufactured electric vehicles and 8.5 per cent on locally manufactured hybrids up to 1800cc. What did change was the treatment of high-value imported completely-built-up EVs, which is a different question affecting a different buyer.
Is an imported EV still cheaper than a local one on tax?
It depends entirely on value. Below the first threshold an imported CBU EV remains outside the new excise, but it still faces customs duty and the ordinary import taxes, while a locally assembled EV gets the 1 per cent sales tax and its manufacturer gets concessional duty on CKD components. Above roughly USD 75,000 the imported route now also carries 30 or 40 per cent excise, which is a decisive difference.
What is the NEV Adoption Levy and do I pay it?
It is a levy on internal combustion engine vehicles introduced to push buyers toward electric alternatives, charged at 1 per cent below 1300cc, 2 per cent from 1300 to 1800cc and 3 per cent above 1800cc. It applies to locally manufactured and assembled vehicles on invoice price inclusive of duties and taxes, and to imports, and it covers buses and trucks as well as cars. If you are buying a petrol or diesel vehicle it is in your price whether or not it is itemised.
Are standard hybrids about to lose their concession?
That is the risk the draft Auto Policy 2026-31 has been reported as carrying — treating hybrid and combustion vehicles equally for duties and taxes, with the concessional treatment concentrated on full electric. The draft was still under legal vetting and IMF discussion at the date of writing, so nothing has changed yet. But anyone choosing a hybrid on a multi-year cost basis should price in the possibility that the 8.5 per cent rate does not survive.
How are REEVs classified?
Unresolved, and it matters because range-extended EVs are in the current launch wave. The market expectation before the budget was that REEVs might be stripped of pure-EV status and grouped with PHEVs and hybrids; the budget did not conclusively settle it. Ask for the sales tax rate shown on the invoice rather than relying on how the vehicle is marketed.
Does an EV escape the other vehicle taxes too?
No. The concessions are on sales tax and import duty. Advance tax on registration under section 231B, provincial token tax, transfer tax and the ordinary income tax consequences of owning a documented asset all still apply. An EV is cheaper on the purchase-tax stack, not exempt from the ownership stack.
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