Govt Suggests Cutting Sales Tax on EVs – Details
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.