Govt Withdraws Sales Tax Hike on Hybrid Cars!

In the recent 2025–26 budget, proposals were made to increase taxes on certain cars that previously benefited from lower tax rates. Previously, it was announced that the locally manufactured smaller cars with an 850cc engine would experience a rise in sales taxes. However, where small cars are expected to bear higher taxes, what about the cars with higher engine capacities? Considering this, here is another news regarding the sales tax on hybrid cars rejected in Pakistan. Let’s have a look!

Sales Tax on Hybrid Cars Rejected in Pakistan

In the recent news, it was expected that the sales tax on hybrid cars with a 1800cc engine is likely to increase. The following was expected from the sales taxes: 

Existing GST on Hybrid Cars: 12.5%

Proposed GST: 18%

But the federal government had decided to withdraw this expected increase in the sales tax on Hybrid Vehicles. Therefore, these will now only bear the tax of 12.5% in Pakistan. It is also announced that the increase in the hybrid cars is not expected before June 2026, according to the recent auto policy in Pakistan.

Furthermore, you also need to know that the government has not yet announced anything related to the taxes on small cars with 850cc engines, such as the Suzuki Alto and Every. Does this mean that the government is likely to implement this sales tax on the ride of medium income people and make an exception for the high-income people? Well, I can not say anything about it yet.  

Conclusion 

To sum up, people thinking of buying Hybrid Vehicles in Pakistan this year are all safe from the tax hike. The sales tax on hybrid cars is rejected for now, but there are chances of an increase in the next year’s budget. However, it is the right time for you to decide to buy a hybrid car.