The GST on hybrid vehicles will likely be set at 18 percent in Pakistan’s upcoming Auto Policy.
According to Business Recorder, a summary proposing an 18 percent sales tax on hybrid vehicles has been moved to the Finance Division. The proposal will require approval from the federal cabinet before it can take effect.
Why Hybrid GST Increased to 25%
Before June 30, 2026, hybrid vehicles were subject to reduced sales tax rates based on engine capacity.
Hybrid vehicles with engines up to 1,800 cc were charged an 8.5 percent sales tax, while vehicles above 1,800 cc were subject to a 12.75 percent rate.
However, these concessions expired automatically on June 30, 2026, as the government did not extend them.
As a result, hybrid vehicles reverted to the standard 25 percent sales tax rate from July 1, 2026.
This rate applies to vehicles with an engine capacity of more than 1,400 cc or a value exceeding Rs. 4 million.
Is the Government Reducing Hybrid Car Tax?
Technically, bringing the tax down from the current 25 percent to 18 percent would be a reduction.
However, looking at the broader picture, hybrid vehicle taxes are still increasing.
Before June 30, buyers were paying either 8.5 percent or 12.75 percent sales tax. Under the proposed structure, both categories would likely move to a flat 18 percent rate.
| Hybrid vehicle category | Previous GST | Current GST | Proposed GST in Auto Policy |
|---|---|---|---|
| Up to 1,800cc | 8.5% | 25% | 18% |
| Above 1,800cc | 12.75% | 25% | 18% |
Therefore, the proposed 18 percent rate would provide relief compared with the temporary 25 percent rate, but it would still represent a sizeable increase over the concessions available before July 1.
New Auto Policy Expected in August
The government is expected to settle the long-term tax treatment of hybrid vehicles under the upcoming Auto Policy 2026–31.
The policy is currently expected to be announced in August 2026, although the government has not confirmed an exact date.
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