Raising GST for electric scooters from 1% to 18% could have a heavy negative impact on the government’s efforts to promote EV adoption in Pakistan. Recently, FBR has issued notices to multiple EV scooter brands in Pakistan highlighting the fact that they are paying 1% tax instead of the original 18%.
Policy for EV Two-Wheelers
Under the previous policy, all electric two—and three-wheelers were required to pay only 1% sales tax to boost sales. The sudden demand for paying the remaining 17% goes against the government’s own policy and could massively affect the productivity of these EV scooter companies. This could lead to a significant loss in their contribution to sustainability in our society.
Keeping environmental concerns in mind, the Government of Pakistan came up with such incentives due to the NDC signed with the UNDP (United Nations Development Program), which has a conditional target of an overall 50% reduction of its projected emissions by 2030, with a 15% reduction from the country’s own resources and a 35% reduction subjected to the provision of international grant finance.
Furthermore, the Ministry of Climate Change, Government of Pakistan issued the National Electric Vehicle Policy in 2019, which will remain effective for five years. This policy allows all local manufacturers of EV two-wheelers and three-wheelers to only pay a 1% sales tax.
“All two and three-wheeler EVs manufactured locally will be sold at a 1% sales tax in order to bring the purchase price of EVs down”, states the ministry’s policy.
FBR Notice – A Stark Contradiction
The FBR notice, in its current form, presents a stark contradiction. By arguing that electric scooters were not explicitly mentioned in the policy, it is inadvertently discouraging the promotion and selling of electric scooters in the local market. This contradiction needs to be addressed urgently to ensure the smooth progression of our EV initiatives.
The government needs to address this policy ambiguity, as scooters are a crucial part of the two-wheeler vehicle ecosystem. A 17% differential tax could effectively cause these brands to increase prices to cover the costs, affecting purchasing power. This would create a domino effect, and the government’s goals of reducing the carbon footprint could also be massively affected.
Policy maker in Pakistan doesn’t understand how industrialisation increase in Pakistan. They make money on their benefits and doing bad for the country, Motorcycle and Scooters are Two-wheelers and the Sales Tax policy for Electric Two Wheelers are same for EV Scooters and Motorcycles 🏍