The federal government has proposed increasing the General Sales Tax (GST) on hybrid vehicles from 8.5% to 18% in the 2025-26 budget. This change is expected to raise prices of many popular hybrid car models by PKR 1 to 1.4 million across Pakistan, making these eco-friendly options less affordable for buyers.
According to ProPakistani, the government aims to apply a uniform 18% GST on all types of vehicles — petrol, diesel, and hybrid — as part of broader tax reforms. Previously, hybrids benefited from a lower GST rate to encourage their adoption, but this incentive will be removed, potentially discouraging environmentally friendly vehicle purchases.
Data from PakWheels reveals that popular hybrid models, currently priced competitively, will see significant price hikes if the new tax is implemented. The increase is expected to impact consumer decisions, possibly leading to a slowdown in hybrid car sales.
Auto industry experts warn that the higher GST could reduce demand for hybrids, delaying Pakistan’s transition to cleaner transportation. They stress that hybrids help save fuel and reduce pollution, so taxing them heavily may hurt long-term environmental goals.
While the government seeks to simplify tax rates and increase revenue through this reform, the potential effect on green vehicle adoption remains a concern. Industry players and consumers are closely watching the budget announcement for final decisions on hybrid vehicle taxation.