The federal government is considering new tax measures that could increase the prices of cars and other alternative-energy vehicles in the upcoming Budget 2026-27.
According to reports, discussions are underway regarding proposed tax revisions for electric and hybrid transport products. The changes are part of broader fiscal planning aimed at increasing government revenue and aligning tax policies with international commitments.
Sources familiar with the budget process said the International Monetary Fund (IMF) has opposed the introduction of new tax exemptions. Instead, it has reportedly recommended a significant increase in the General Sales Tax (GST) on electric vehicles. Under the proposal, GST on electric vehicles could rise from the current 1 percent to 18 percent.
Hybrid vehicles may also face higher taxation. Authorities are considering raising GST on hybrid models from 8 percent to 18 percent. If implemented, the move would likely lead to higher prices for hybrid and electric cars across the country.
The proposed tax adjustments are not limited to the automobile sector. Reports suggest that solar panels could also face an increase in GST, rising from 10 percent to 18 percent. Such measures may affect consumers who have been turning to renewable energy solutions to manage rising electricity costs.
Industry experts believe that higher taxes could significantly impact the prices of electric cars, motorcycles, buses, trucks, rickshaws, tractors, pickups, and other eco-friendly vehicles. This could potentially slow the adoption of cleaner transportation options in Pakistan.
The proposals remain under review and have not yet been finalized. Government officials are assessing different options before presenting the federal budget.
Meanwhile, representatives of the textile industry have urged authorities to release pending refunds worth Rs327 billion. They have also requested reductions in electricity tariffs, gas charges, and taxes, arguing that high operational costs and delayed payments are reducing the sector’s competitiveness in international markets
Also Read: Pakistan Preparing Major Relief Package for Car Buyers
