Breaking News: New Sales Tax Rates for EVs and Hybrids
The government’s draft Auto Policy 2026–31 has revealed a new sales tax plan for cars, and it brings mixed news for electric and hybrid buyers. The good part: the EV sales tax in Pakistan for fully electric cars stays at just 1%. The surprise: range-extended EVs will now pay more, while plug-in hybrids get a big cut.
The new structure sets tax according to the type of powertrain, not just engine size. The aim is to push buyers toward new energy vehicles while also easing the load on some petrol cars. Let’s look at the full breakdown in simple terms.
EV Sales Tax in Pakistan: Current vs Proposed Rates
Here is the complete sales tax rate comparison from the draft policy:
| Powertrain | Engine Size | Current Rate | Proposed Rate |
|---|---|---|---|
| BEV (fully electric) | – | 1% | 1% (no change) |
| REEV (range-extended EV) | – | 1% | 6% |
| PHEV (plug-in hybrid) | Up to 2,000cc | 18% | 9% |
| PHEV (plug-in hybrid) | Above 2,000cc | 25% | 9% |
| HEV (hybrid) | Up to 2,000cc | 18% | 18% (no change) |
| HEV (hybrid) | Above 2,000cc | 25% | 25% (no change) |
| Petrol (ICE) | Up to 1,400cc | 18% | 18% (no change) |
| Petrol (ICE) | 1,400–2,000cc | 25% | 18% |
| Petrol (ICE) | Above 2,000cc | 25% | 25% (no change) |
Winners: BEVs and Plug-In Hybrids
Battery electric vehicles are the clear winners because they keep the lowest 1% rate. This protects the low prices of locally assembled EVs and keeps them attractive for families.
Plug-in hybrids get the biggest relief. PHEVs up to 2,000cc will see tax fall from 18% to 9%, and bigger PHEVs above 2,000cc will drop from 25% to 9%. That could cut lakhs of rupees from the price of popular plug-in SUVs once the policy is final.
Petrol Cars Also Get Some Relief
Petrol cars between 1,400cc and 2,000cc will move from 25% to 18% tax. Small cars up to 1,400cc stay at 18%, and large cars above 2,000cc remain at 25%.
Losers: Range-Extended EVs
REEVs, which carry a small petrol engine to recharge the battery, will see their rate jump from 1% to 6%. That is a five-point rise. Buyers of range-extender models, including some small local EVs, may face higher prices if this change goes ahead. Normal hybrid cars (HEVs) see no change at all.
What It Means for E-Bike and Scooty Buyers
This table covers four-wheel vehicles. Electric bikes and scooties are not part of this sales tax change. Earlier this week the government also said no to an 18% IMF tax on electric vehicles, which we covered in our report on electric vehicle tax in Pakistan. Overall, the policy direction remains friendly toward electric two-wheelers.
If you want to go electric at a low cost, two-wheelers are still the cheapest route. See the latest electric bike price in Pakistan and electric scooty prices. Under the PM electric bike scheme, eligible people can buy e-bikes on easy installments. Check the eligibility criteria, prepare your documents, and follow our how to apply guide. You can also use the PAVE subsidy calculator to see your possible savings.
Is the New Tax Plan Final?
Not yet. These are proposed rates in the draft Auto Policy 2026–31, so changes are still possible before the final notification. The Prime Minister has already approved the broad policy, as we explained in our post on the new auto policy 2026-31. Buyers planning to purchase a PHEV may want to wait for the final rates, while BEV buyers can go ahead without worry. The rate details were first reported by ProPakistani, citing PakWheels.
Quick Tips Before You Buy
- BEV buyers – no change expected, so you can book with confidence.
- PHEV buyers – waiting for the final notification could save a large amount.
- REEV buyers – booking before the new rate applies may help you avoid the 6% tax.
- Budget buyers – an electric bike or scooty remains the lowest-cost way to cut fuel bills.
Also Read: Nora EV Official Prices Finally Revealed | McDonald’s to Add EV Charging at Restaurants | Karachi to Get New Electric and Double-Decker Buses | Rs 1.7 Billion Vehicle Testing Institute Planned
Frequently Asked Questions
What is the sales tax on electric cars in Pakistan?
Fully electric cars (BEVs) pay 1% sales tax, and the draft Auto Policy 2026–31 keeps this rate unchanged.
Will plug-in hybrids get cheaper?
Yes. The draft policy cuts PHEV sales tax from 18% to 9% up to 2,000cc and from 25% to 9% above 2,000cc.
Why is tax on REEVs going up?
The draft raises REEV sales tax from 1% to 6% because these vehicles also use a petrol engine as a range extender.
Does this tax change affect electric bikes?
No. The proposed table covers cars. Electric bikes and scooties are not part of this sales tax change.
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