Islamabad, July 17, 2025 – The Federal Board of Revenue (FBR) has officially notified the rates for the newly introduced New Energy Vehicles Adoption Levy, enacted under the New Energy Vehicles Adoption Levy Act, 2025.
The levy has been introduced as part of the broader fiscal reforms under the Finance Act, 2025, aimed at encouraging the shift towards environmentally friendly transportation technologies while disincentivizing reliance on traditional internal combustion engine (ICE) vehicles.
The FBR has imposed the levy under Section 3 of the Act, which mandates that a specific levy be collected from either manufacturers or importers of internal combustion engine vehicles, depending on engine size and origin (local or imported). The collected levy will be deposited into the Federal Consolidated Fund.
According to the FBR, the rates are structured on an ad valorem basis — calculated as a percentage of the vehicle’s invoice or assessed value (inclusive of duties and taxes). The levy does not apply to new energy vehicles, export-bound ICE vehicles, or vehicles owned by diplomatic missions or exempted under official government notifications.
The following are the notified rates of the levy:
| S. No. | Motor Vehicle Category | Levy to be Paid By | Rate of Levy |
| 1 | ICE motor vehicles (assembled/manufactured in Pakistan) with engine <1300cc | Manufacturer | 1% ad valorem of invoice price |
| 2 | ICE motor vehicles (imported) with engine <1300cc | Importer | 1% ad valorem of assessed value |
| 3 | ICE motor vehicles (assembled/manufactured in Pakistan) with engine 1300–1800cc | Manufacturer | 2% ad valorem of invoice price |
| 4 | ICE motor vehicles (imported) with engine 1300–1800cc | Importer | 2% ad valorem of assessed value |
| 5 | ICE motor vehicles (assembled/manufactured in Pakistan) with engine >1800cc | Manufacturer | 3% ad valorem of invoice price |
| 6 | ICE motor vehicles (imported) with engine >1800cc | Importer | 3% ad valorem of assessed value |
| 7 | Buses and trucks (assembled/manufactured in Pakistan) | Manufacturer | 1% ad valorem of invoice price |
| 8 | Buses and trucks (imported) | Importer | 1% ad valorem of assessed value |
Legal Framework Under Section 3
Section 3 of the Act outlines the legal basis for the levy, making it mandatory for:
Manufacturers of ICE vehicles to pay the levy upon production or assembly.
Importers of ICE vehicles to pay the levy upon clearance into Pakistan.
Sub-section (2) clarifies that the rates shall be in accordance with the First Schedule, while sub-section (3) gives the Federal Government the authority to revise rates, add new categories, or remove existing ones through official notification. Sub-section (4) exempts new energy vehicles and certain categories of ICE vehicles from this levy to promote clean mobility and maintain diplomatic protocols.
This new taxation measure by the FBR serves as a policy signal aimed at nudging manufacturers and consumers toward adopting energy-efficient vehicles. The introduction of the levy and differential rates based on engine size reflects a graduated approach to shifting away from fossil fuel-reliant transport, in line with Pakistan’s broader environmental and economic sustainability goals.