Auto Policy Proposes 1% Sales Tax on EVs, Revenue Plan
The proposals, which remain subject to IMF approval, would give electric vehicles up to $75,000 about Rs85 billion in sales tax relief, offset by an alternative revenue plan.
Pakistan’s draft auto policy proposes a 1% sales tax on EVs up to $75,000, worth Rs85bn in relief, with an alternative revenue plan subject to IMF approval.
Pakistan’s new auto policy is expected to introduce changes to taxes and levies, including a proposed 1% sales tax on electric vehicles (EVs) valued at up to $75,000, according to sources. The measure could provide about Rs85 billion in sales tax relief for EVs, and the government is considering an alternative plan to raise an equivalent amount in revenue. The proposals remain subject to further consideration and IMF approval.
Proposed Measures
Automotive Development Levy: Amendments to the Finance Bill may provide for a levy of 2% on petrol-engine vehicles of 1,001cc to 2,000cc and 10% on vehicles of 2,001cc and above, applying to locally made and imported vehicles.
Federal Excise Duty: A 10% duty on EVs valued at more than Rs20 million.
Carbon levy: A levy on petrol, diesel and internal combustion engine vehicles, with estimated yields of Rs25 billion in one estimate and Rs37 billion in another; the relationship between the two figures has not been clarified.
Buses and trucks: An Automotive Development Levy on buses and trucks, expected to generate Rs45 billion.
Together, the measures are intended to balance the Rs85 billion in potential EV relief with additional vehicle-related revenue.
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