Tax on the new cars launching in Pakistan
The 2026 launch wave
Arif Habib Limited's launch tracker put 23 new models into the Pakistani market between June and December 2026 across 14 brands — 9 fully electric, 11 plug-in hybrid and 3 petrol. That is roughly 87 per cent electrified, and it changes the tax question completely, because powertrain now drives the bill.
| Tracked in the 2026 wave | Powertrain |
|---|---|
| MG IM5, MG IM6, Nevo A06, Changan Lumin, Avatr 07, Aion ES | EV |
| GWM Cannon Alpha, Omoda C7, Jaecoo J8, BYD Sealion 6, Nevo Q07, Denza B5, Denza B8 | PHEV |
| Nevo Q05, Deepal G318 | REEV |
| Changan UNI-S, Jetour T1, Jetour T2 | Petrol |
Also flagged for the period around and after this wave: Jetour G700, Jetour TX, Omoda 07, Omoda 04, Chery QQ EV3 and Hyptec HT. Launch timing slips routinely, so treat every date as indicative.
What each powertrain carries
| Powertrain and route | Sales tax | NEV Adoption Levy |
|---|---|---|
| Locally manufactured EV | 1% | Not applicable |
| Locally manufactured HEV up to 1800cc | 8.5% | Not applicable |
| ICE under 1300cc | Standard | 1% |
| ICE 1300–1800cc | Standard | 2% |
| ICE above 1800cc | Standard | 3% |
The Eighth Schedule concessions for locally manufactured EVs and hybrids were extended rather than withdrawn in the Finance Act 2026 — the feared jump to 18 per cent did not happen. The New Energy Vehicle Adoption Levy is charged on the invoice price inclusive of duties and taxes for locally assembled vehicles, and on import value for imported ones, and it reaches buses and trucks as well as cars.
We handle the computation, the minimum-tax comparison, statutory accounts and the annual filings together.
Avail our corporate tax servicesIf the vehicle is imported
The Finance Act 2026 took a dual-track approach: easier on small imported cars, much harder at the top.
- Imported CBU electric cars and SUVs — the blanket zero FED is gone. Exempt up to roughly USD 75,000, then 30 per cent, then 40 per cent above roughly USD 110,000. The same thresholds are reported in rupees as about Rs 20 million and Rs 30 million.
- Imported petrol vehicles above 2000cc — a Special Excise Duty applies on top of existing excise, which offsets the customs reductions elsewhere in the Act.
- CKD kits for local assembly — concessions were retained, with EV-specific components such as batteries, motors and controllers attracting 1 per cent customs duty, reported as running to 30 June 2027.
The policy logic is consistent: protect local assembly and mass-market green mobility, tax the luxury import end.
The taxes that come after the price
The sticker price is not the last payment. Budget for:
- Advance tax on registration under section 231B, which differs between filers and non-filers — see the registration advance tax guide.
- Annual token tax, which is provincial and which changed materially for Islamabad — see the token tax guide.
- Transfer tax if you sell within the period where it bites.
And if you are a filer, remember the vehicle is a documented asset. A car bought this year has to appear in the wealth statement, and the funding has to reconcile.
What is not settled
The Auto Policy 2026-31 was still in draft at the date of writing, undergoing legal vetting and IMF discussion. Reported proposals include 1 per cent on new energy vehicles, 9 per cent on hybrids, concessional duty on locally produced EV parts, and an environmental levy on larger engines reported at around 10 per cent for 2001–3000cc and 19.5 per cent above 3001cc. The IMF position has been reported as favouring full standard sales tax across the board with direct subsidies instead of concessional rates.
None of that is law. But the direction matters if you are choosing between a hybrid and an EV on a three-year view, because hybrids are the category the draft treats least favourably.
Source check: 14 September 2026. The launch list and the 9 EV / 11 PHEV / 3 petrol split are from reporting of Arif Habib Limited's Upcoming Automobile Launch Tracker. The NEV Adoption Levy bands, the Eighth Schedule rates of 1 per cent and 8.5 per cent, 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 have not been verified clause by clause against the enacted text. The USD and PKR threshold figures are reported differently across sources and appear to describe the same bands. Launch dates are indicative and slip. Confirm the rate applied to your specific vehicle on the invoice before purchase; this is orientation, not a quotation.
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)
- FBR: Mobile Devices Regularization — DIRBS
- Withholding Tax Rate Cards (FBR)
Questions people also ask
Does the tax depend on the brand?
No, and this is the thing most buyers get wrong. The badge is irrelevant to the tax computation. What matters is the powertrain, whether the vehicle is locally assembled or imported completely built up, the engine capacity where it has one, and the assessed value. A BYD and an MG on the same powertrain and the same assembly route carry the same treatment.
Most of these launches are PHEVs. Are they taxed like EVs?
Not necessarily, and this is the live uncertainty. The concessional 1 per cent sales tax in the Eighth Schedule attaches to locally manufactured electric vehicles, with a separate 8.5 per cent rate for locally manufactured hybrids up to 1800cc. Where a plug-in hybrid falls between those is a classification question with real money attached, and the draft Auto Policy 2026-31 has been reported as proposing that hybrids be treated the same as combustion vehicles. Confirm the classification for the specific model before signing.
What about range-extended EVs like the Nevo Q05 and Deepal G318?
REEV classification was the open question through the budget cycle and was not conclusively settled. The concern in the market was that REEVs would be stripped of pure-EV treatment and grouped with PHEVs and standard hybrids. Because several REEVs are in the 2026 launch wave, a buyer should ask the dealer to show the sales tax rate actually applied on the invoice rather than assume the EV rate.
Are imported EVs still tax-free?
Only at the lower end. The Finance Act 2026 replaced the blanket zero FED on imported completely-built-up electric cars and SUVs with a tiered structure: exempt up to roughly USD 75,000, then 30 per cent, then 40 per cent above roughly USD 110,000. Reporting expresses the same thresholds in rupees as about Rs 20 million and Rs 30 million. A mass-market imported EV is unaffected; a premium European electric SUV is affected heavily.
Will prices fall because customs duties were reduced?
For some vehicles, yes — duties on smaller imported cars were reduced. But imported petrol vehicles above 2000cc picked up a Special Excise Duty that more than offsets the reduction, so the direction of travel depends entirely on where the vehicle sits. Treat any blanket claim that "car prices are coming down" as needing a check against the specific engine size and value band.
Should I wait for the Auto Policy 2026-31?
If you are buying a hybrid, the policy is worth watching, because the draft has been reported as removing the special treatment hybrids currently enjoy. If you are buying a mass-market locally assembled EV or a small petrol car, the current position is already law and waiting mainly costs you time. The policy was still in draft and under IMF discussion at the date of writing, so no dates should be assumed.
Send the tax year and the transaction or filing involved, and we will tell you what is actually required.
Talk to Chartered Advisory Open the tax calculators