ISLAMABAD: The federal government is considering withdrawing sales tax concessions on electric vehicles, hybrid vehicles and solar panels in the 2026-27 budget, a move that could increase prices across the sectors if approved.
According to sources, policymakers are reviewing a range of tax exemptions as part of the upcoming budget preparations, with electric and hybrid vehicles among the sectors under consideration for higher taxation.
Sources said the government is likely to impose the standard 18 per cent sales tax on electric and hybrid vehicles. The proposal comes after the International Monetary Fund (IMF) reportedly declined Pakistan’s request to retain existing tax incentives for the sector.
If implemented, the change would significantly increase the tax burden on electric vehicles, which currently benefit from a sales tax rate as low as 1 per cent. Hybrid vehicles, which have been subject to a reduced rate of around 8 per cent, could also be brought under the standard sales tax regime.
Solar sector also under review
Sources further indicated that solar panels and related equipment may also face a higher tax rate in the new fiscal year.
The sales tax on solar products could rise from the current 10 per cent to 18 per cent as part of broader efforts to rationalise tax exemptions and increase revenue collection.
Vehicle imports decline
Data shared by sources shows that approximately 45,000 vehicles were imported during the previous fiscal year, while imports are expected to decline to around 40,000 units in the current fiscal year.
Between July and April of fiscal year 2025-26, nearly 38,000 vehicles were imported into the country.
Officials are continuing to review existing tax concessions, and additional changes may be included in the final budget proposals before they are presented for approval
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