Pakistan Imposes 25% Sales Tax On Hybrid Cars From July 2026

Islamabad: The government of Pakistan has imposed a 25 percent sales tax on hybrid cars, marking a major increase in the cost of imported and locally supplied hybrid vehicles, officials confirmed on Tuesday.

This new tax came into effect on July 1, 2026, after the previous tax exemption on hybrid cars expired on June 30 with the end of the 2025–26 fiscal year. Under revised tax law, hybrid vehicles are now listed under Schedule II of SRO 297(I)/2023, making them subject to the higher rate.

The concession had previously exempted hybrid and electric vehicles from high taxes, keeping the cost lower for buyers and encouraging cleaner mobility. However, with the exemption no longer in force, the higher tax rate is expected to significantly increase retail prices, especially for imported cars.

Officials noted that the expiration of tax benefits also impacts some electric vehicle (EV) incentives, following the expiry of related concessions such as reduced sales tax on framework kits used by local EV manufacturers.

Industry experts suggest that the tax change could reduce demand for hybrids in the short term, as buyers face higher upfront costs. As the auto sector adapts, consumers and dealers alike will watch closely for any further government policy revisions affecting vehicle taxation.

Source: ARY News