ISLAMABAD: The federal government has reduced the sales tax on locally manufactured hybrid electric vehicles (HEVs) from 25% to 18%, according to a notification issued by the Ministry of Finance.
The reduced sales tax rate will take effect from September 13, 2026.
The decision has been taken to address a sales-related issue affecting locally manufactured hybrid electric vehicles ahead of the implementation of the country’s new auto policy.
According to the notification, SRO 1525(I)/2026 has been issued under clause (b) of sub-section (2) of Section 3 of the Sales Tax Act, 1990.
Under the new notification, the sales tax applicable to locally manufactured hybrid electric vehicles has been reduced from 25% to 18%.
Officials said the measure aims to remove complications surrounding the sale of locally manufactured hybrid electric vehicles produced before the new auto policy comes into effect.
The tax reduction is expected to provide greater clarity for the automotive industry regarding the taxation of locally produced hybrid vehicles during the transition to the new policy framework.