KARACHI, June 13, 2025 — Pakistan’s automotive industry is calling for urgent clarification regarding tax measures proposed in the federal budget 2025–26, which could drastically affect investment flows and future growth in the electric and hybrid vehicles segment.
Industry leaders warn that unresolved inconsistencies in tax rates could derail billions of dollars invested under the government’s current automotive policy, particularly in the electric and hybrid sectors.
Syed Asif Ahmed, General Manager of MG Motors Pakistan, voiced serious concerns during a media briefing, pointing out a long-standing disparity in the taxation of vehicles powered by alternative energy. Currently, Hybrid Electric Vehicles (HEVs) benefit from a reduced General Sales Tax (GST) rate of 8.5%, while Fully Electric Vehicles (EVs) are taxed at a significantly higher 18%.
“This discrepancy has created a distorted market for years, unfairly benefiting hybrid vehicles at the expense of fully electric ones,” Ahmed said. He referred to recent social media reports suggesting that the government may raise the GST on HEVs to 18%, aligning it with the EV rate. “Such a move would contradict the spirit of the Automotive Industry Development and Export Policy (AIDEP) 2021–26, which promised no new duties or tax changes until mid-2026.”
Ahmed emphasized that, instead of raising taxes on hybrid vehicles, the government should consider reducing the GST on electric vehicles to 8.5% to create a level playing field and support the transition to green mobility. The Finance Bill 2025–26, he noted, remains silent on this issue, leaving electric and hybrid investors in a state of uncertainty.
In addition to the GST disparity, Ahmed raised alarms about the misuse of used vehicle import schemes. He claimed commercial traders are exploiting gift, baggage, and transfer of residence schemes to import second-hand cars while avoiding standard import duties and restrictions. Allowing the import of five-year-old used vehicles with relaxed regulatory duties would, according to him, undermine local manufacturers.
Industry stakeholders are now urging the government to promptly address these concerns and provide policy clarity to protect existing investments and support the future of electric and hybrid transportation in Pakistan.