Govt Suggests Cutting Sales Tax on EVs – Details

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When the global auto industry is embarked on embracing green technology, specifically, the old car conglomerates are initiating new ventures for electric vehicles, Pakistan has also started taking progressive steps to encourage the adoption of EVs (EVs).

In a recent event, the government has proposed significant tax reductions and policy changes. The Ministry of Commerce has suggested eliminating the 25% sales tax on EVs priced above Rs. 4 million and removing the cap on EV batteries for cars, vans, and SUVs. These recommendations aim to make EVs more accessible and promote sustainable transportation in the country.

Policy Discussions 

This proposal was discussed in a recent steering committee meeting focused on EV policies. During the meeting, the Ministry of Commerce’s additional secretary emphasized the importance of scrapping the battery cap and reducing sales tax to encourage EV adoption.

The Ministry of Industries and Production (MoIP) has directed the Engineering Development Board (EDB) and the New Energy Vehicle (NEV) Policy team to evaluate these proposals further.

To support these changes, the Pakistan Standards and Quality Control Authority (PSQCA) has been tasked with developing standards for EVs in collaboration with EDB. These standards are expected to emphasize value addition, fostering local manufacturing and job creation.

Reduced Electricity Tariffs

In parallel, the government has announced a substantial reduction in electricity tariffs for EV charging stations. Prices have dropped from Rs. 71 per unit to Rs. 39.70 per unit—a 44% decrease. This unprecedented move is expected to cut travel costs significantly, making EVs a more viable alternative to traditional fuel-based vehicles.

Additionally, new regulations for setting up EV charging stations and battery swapping points have been introduced under the Power Division’s National Energy Conservation Authority (NEECA). These regulations aim to streamline infrastructure development, further supporting EV users.

The reduced electricity costs could result in threefold savings in travel expenses compared to conventional fuels. This move aligns with the government’s broader EV policy, which seeks to offer incentives for electric bikes and cars, reducing dependence on expensive fuel imports.

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1 Comment
  1. Ali Khan says

    “Ministry of Commerce’s additional secretary emphasized the importance of scrapping the battery cap and reducing sales tax to encourage EV adoption”

    This is the main point! The arbitrary cap on battery size that was placed in the old and current EV policies was/is only for the benefit of the existing ICE car players in the market. Especially the old three.
    For those who might not know, any car with a battery size over 50kwh is charged at full tax. (As if the rest of the world operates under rules of our old big three car assemblers with stagnation being a key feature.) 🤦‍♂️
    In the few years since that policy was drafted, the world has moved on significantly and now EVs with over 50kwh batteries are the norm. This one arbitrary rule if left in place will needlessly make EVs more expensive and will only serve to keep EV adoption in Pakistan behind the rest of the region.

    Even now EVs are still very expensive. Small EV cars like the Honri EV are all around $5000 or 1,500,000 PKR in china. In Pakistan they are around 4 to 5 million prk. If the government is serious about its EV charging station expansion, then these high prices need addressing.
    Also, even though there are cheap(er) EV bikes and scooters available in the market and there are many people who would like to purchase them, there are no good financing options available or none at all. The government must endorse and compel banks to offer easy and low, single digit interest rate, financing for EV cars and Bikes etc.

    It is imperative that our dear leaders not pair EV bikes and scooters with laptops and only distribute them to students for optics. It is imperative that these people understand their significance in fighting smog issues all over Pakistan and treat them as such and make them easy for the average Pakistani to afford and finance.

    These are all simple and easy steps which can be implemented ASAP if the leadership is willing. And if political optics and gain is their only motivation, think of the impact such simple moves would have on dear leaders. Hopefully if implemented, by next year or so, when there is a marked decrease in smog because of these steps, just think of the positive votes. 🤔 👍

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