The government has approved the initial draft of a new five-year Auto Policy 2026–2031, proposing phased reductions in duties on imported hybrid vehicles and additional tax incentives for electric vehicles.
Follow Times of Karachi on Google News and add as a preferred Source on Google
Prime Minister Shehbaz Sharif has approved the initial draft and directed officials to make further changes to the proposed policy before its finalisation.
The prime minister has called for greater emphasis on technology transfer, local manufacturing and employment opportunities for skilled Pakistanis under the new auto policy.
The draft proposes additional tax relief for small electric vehicles and a 1% concessional sales tax on auto parts used in the local manufacturing of electric vehicles.
Tax Relief Proposed for Electric Vehicles
Under the proposed policy, electric vehicles may continue to remain exempt from Federal Excise Duty (FED), Capital Value Tax (CVT) and Advance Income Tax (AIT).
The draft, however, proposes ending existing sales tax concessions available for hybrid vehicles.
It also proposes a 1% concessional customs duty on raw materials and parts used for electric vehicle charging stations.
Hybrid Vehicle Duties Proposed to Be Reduced
One of the major proposals in the Auto Policy 2026–2031 is a phased reduction in duties on imported hybrid vehicles.
The duty on imported hybrid vehicles is proposed to be reduced from 50% to 30%.
For hybrid trucks and buses, the proposed duty would decline from 30% to 15%, while the duty on hybrid light commercial vehicles is proposed to be reduced from 60% to 30%.
The proposed measures are aimed at encouraging investment in Pakistan’s automotive sector, promoting technology transfer, increasing local manufacturing and supporting the adoption of electric and hybrid vehicles.
However, the government is expected to consult the International Monetary Fund (IMF) on the proposed auto policy in October before finalising the framework.
