EV sales tax Pakistan budget increase hits imported electric vehicles with up to 25% as exemptions expire and the government withdraws key incentives
Pakistan’s electric vehicle market faces a major policy shift. The government plans to impose up to 25 percent sales tax on imported electric vehicles in the upcoming budget. The EV sales tax Pakistan budget change arrives as several key exemptions are set to expire on June 30, 2026. Moreover, the exemption on CKD kit imports for locally manufactured EVs will also lapse on that date. Therefore, both imported and locally assembled electric vehicles face a significantly higher tax burden from July 1.
The current framework has been generous to the EV sector. A 1 percent sales tax applies to locally manufactured four-wheeler EVs until June 30. Furthermore, CKD exemptions cover small cars and SUVs with battery capacities up to 50 kWh and light commercial vehicles up to 150 kWh. Those exemptions disappear at the end of the month. Therefore, the cost of manufacturing and buying electric vehicles in Pakistan rises sharply once the new fiscal year begins.
Hybrid vehicles, however, escape the tightening. Locally manufactured hybrids currently attract a reduced sales tax between 8.5 and 12.75 percent. Furthermore, sources confirmed those rates will remain unchanged in the next fiscal year. Therefore, hybrid buyers and manufacturers face no additional burden while EV stakeholders absorb the full impact of expiring incentives.
The Senate Standing Committee on Finance also approved the Customs Amendment Bill 2026, implementing financial provisions of the Automotive Industry Development and Export Policy. Furthermore, the government proposed extending customs duty concessions on EV parts and components until June 30, 2026. The concessions on completely built imported EVs also extend until that date, covering up to 10 units per variant with a 200-unit cap for two and three wheelers.
Pakistan’s original EV policy dates back to June 2020 and offered concessional duties for five years. Those concessions now reach their expiry. Furthermore, no successor framework has been confirmed to replace the outgoing incentives at equivalent levels. Finally, without new policy support, the EV sector that Pakistan spent five years building could face a sharp reversal in momentum just as global electric vehicle adoption accelerates.
