ISLAMABAD (Kashmir English): Prime Minister Shehbaz Sharif has approved a five-year automotive policy for 2026–31, rejecting the International Monetary Fund’s (IMF) proposal to raise the sales tax on electric vehicles.
The policy aims to strengthen Pakistan’s automotive industry by increasing local production, promoting exports, improving competitiveness and encouraging the adoption of electric vehicles (EVs).
It sets a target of increasing vehicle exports to $6 billion over the five-year period.
According to the policy draft, import duties on vehicles will be reduced in stages, and the tariff will be brought up to 15 percent by 2030-31 to increase competitiveness in the auto sector. The framework proposes a 10 per cent federal excise duty on electric vehicles valued above $75,000.
Tax on EVs to be reduced
Moreover, the sales tax on electric vehicles will be reduced gradually by 2031.
The sales tax on battery electric vehicles (BEVs) would remain at 1 per cent from 2026 to 2031, and a sales tax of 6 per cent will be imposed on range-extended electric vehicles, while plug-in hybrid electric vehicles would be subject to a 9 per cent rate, it added.
The policy also proposes reducing import duties on electric vehicles, including smaller EVs priced below $15,000, to make them more accessible to consumers.
To facilitate purchases, the financing limit for electric vehicles is proposed to increase from Rs3 million to Rs10 million, while the maximum financing period would be extended from three to five years.
The measures are intended to promote electric mobility and improve access to smaller, more affordable vehicles.
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