Govt Announces Zero Fees and Taxes On Electric Vehicles
The new budget has brought a lot of good news for the common people. First, we heard about the prices of cars up to 850cc going down due to massive tax exemptions. Then, the government extended the tax relief for cars up to 1000cc. Now, it’s all about electric vehicles in Pakistan.
The government has pushed for the new EV technology with the most benefits. From now on, there will be no registration fee and motor vehicle tax on two-wheeler, three-wheeler, and Heavy Commercial Electric Vehicles (EVs). We’ll have to wait for the upcoming Auto Development Policy and EV Policy for benefits for four-wheeler EVs.
Tax Exemptions on EVs
The government has provided the following incentives to the EV segment in the 2021-22 financial budget.
- Reduction of the General Sales Tax (GST) rate on locally assembled EVs from 17% to 1% for passenger vehicles with a battery pack of up to 50 kW and light commercial vehicles with a battery pack of up to 150 kW
- 8.5% GST on locally assembled and imported hybrid vehicles up to 1800cc and 12.75% on hybrid vehicles between 1801cc and 2500cc
- Zero Federal Excise Duty (FED) on locally assembled EVs
- Zero Value Added Tax (VAT) on the import of Completely Knocked Down (CKD) kits
- Only 1% tax on the import of EV parts
- 1% duty on the imports of charging equipment
All these tax concessions will be implemented from the 1st of July.
No Registration Fee and Vehicle Tax
As per details:
- No registration fee and motor vehicle tax on 2-3-Wheeler and Heavy Commercial Vehicles (HCV) and four wheelers with immediate effect.
As per a notification, the decision has been taken after recommendations by the cabinet division, case no 101/50/2020 dated 22.10.20. Also, the step is taken under the Motor Vehicle Taxation Act 1958.
The government of Pakistan has taken this initiative to encourage auto manufacturers to introduce EV technology in their vehicle lineups. On the same lines, these tax exemptions will also encourage consumers to buy environment friendly electric vehicles. With only a handful of EVs in the country, we still have a long way to go. The new budget and the upcoming auto policies will pave the way forward.