Hybrid Vehicles to Be Included in Green Tax Structure
When the federal budget 2025 was initially announced, we informed you that only Internal Combustion Engine (ICE) vehicles were subject to the newly introduced Green tax. However, after diggint out the matter in depth, we came to know that Hybrid Electric Vehicles (HEVs) are also included within this Green tax framework. However, Plug-in Hybrid Electric Vehicles (PHEVs) with minimum 50km ev range remain excluded from this tax.
According to the definition of NEV, vehicles excluded from the Green tax are those powered:
(i) Only by an electric motor that uses a rechargeable battery; or
(ii) By both an electric motor using a rechargeable battery and a gasoline or diesel engine (PHEV), as long as the car can travel at least fifty kilometers using just the electric motor on a single battery charge.
For HEV and ICE cars, government has proposed the following Green tax rates:
-
1% on vehicles with engines 1300cc or below
-
2% on vehicles with engines from 1301cc to 1800cc
-
3% on vehicles with engines 1801cc and above
Below is a comprehensive list of locally available HEV cars that will be directly affected by this newly proposed Green tax:
| Car Brands | Models | Engine | Ex-factory Price (Rs.) | 2% Green Tax (Rs.) | Expected Price Increase (Rs.) |
|
Haval
|
H6 HEV | 1.5l | 11,749,000 | 234,980 | 11,983,980 |
| Jolion | 1.5l | 9,295,000 | 185,900 | 9,480,900 | |
|
Toyota
|
Corolla Cross 1.8 HEV | 1.8l | 8,999,000 | 179,980 | 9,178,980 |
| Corolla Cross 1.8 HEV X | 1.8l | 9,449,000 | 188,980 | 9,637,980 | |
|
Hyundai
|
Elantra Hybrid | 1.6l | 9,700,000 | 194,000 | 9,894,000 |
| Tucson Hybrid Smart | 1.6l | 10,999,000 | 219,980 | 11,218,980 | |
| Tucson Hybrid Signature | 1.6l | 11,999,000 | 239,980 | 12,238,980 | |
| Santa Fe Smart | 1.6l | 12,490,000 | 249,800 | 12,739,800 | |
| Santa Fe Signature | 1.6l | 13,899,000 | 277,980 | 14,176,980 | |
|
Kia
|
Sportage L HEV | 1.6l | 10,999,000 | 219,980 | 11,218,980 |
| KIA Sorento 1.6T HEV FWD | 1.6l | 14,699,000 | 293,980 | 14,992,980 | |
| KIA Sorento 1.6T HEV AWD | 1.6l | 15,999,000 | 319,980 | 16,318,980 |
Currently, all locally available HEV models fall within the 1301-1800cc category and will therefore attract a 2% Green tax.
The government argues that since hybrid cars also utilize an internal combustion engine (ICE) and consequently produce emissions, it is justified to include them under the this tax structure.
What is the Green Tax?
The new “Green Tax” is a newly introduced levy in the 2025 budget, implemented by the government for the first time. It is a small charge that people will pay when they first buy a car with a gasoline or diesel engine. This tax exists because these cars produce pollution that harms the environment. The money collected from the Green Tax will go toward cleaning the environment and supporting projects that protect nature. This tax also encourages people to buy Electric Vehicles (EVs), which do not produce any pollution.
Consumers are advised to evaluate how these changes may impact their purchasing decisions and consider alternatives as the automotive market adjusts to the evolving regulatory environment.
Let us know what you think about this tax policy?