Prices of hybrid cars are expected to increase significantly as 25% sales tax will be applicable.

ISLAMABAD – Hybrid vehicles are emerging as an attractive option for Pakistani buyers looking for lower fuel costs. Now, with the end of the tax concession by the government, that thing is likely to end. As the standard 25% sales tax comes into effect, buyers are bracing for steep price hikes that could reshape demand and slow the country’s growing shift to hybrid mobility.

The hybrid vehicle market is headed for a major price shock after the government’s sales tax cut incentives officially expire on June 30, 2026, leaving buyers with significantly higher costs and creating uncertainty in the auto industry.

Locally assembled hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) have automatically moved to the standard 25% sales tax regime. The move will replace the earlier preferential tax rate of 8.5% for hybrids with engine capacity up to 1,800cc and 12.75% for those above 1,800cc.

Uncertainty has already disrupted the market, with reports that several automakers have temporarily halted the issuance of invoices for hybrid vehicles while awaiting official clarification on applicable sales tax before processing deliveries. The tax concession was introduced under the last five-year automotive policy to encourage adoption of fuel-efficient and environment-friendly vehicles. However, without a declaration of extension before its expiry, the incentives automatically lapsed, restoring the standard sales tax provisions.

Under the current tax structure, hybrid vehicles are now subject to the same 25% sales tax as applicable to conventional vehicles priced above Rs 40 lakh or equipped with 1,400cc or more engines.

The revised tax regime is expected to affect a wide range of hybrid models offered by manufacturers including Toyota, Honda, Hyundai, Kia, Haval, MG, Jaco and GWM, potentially slowing the rapid growth of the hybrid segment in recent years. Policy uncertainty may also undermine investor confidence in new energy vehicle projects as stakeholders await the government’s next automotive roadmap.

With no official relief announced yet, consumers, automakers and investors are now looking to the government for clarity on the future of Pakistan’s hybrid vehicle market.

The post Big increase in prices of hybrid cars expected, 25 percent sales tax imposed appeared first on Daily Pakistan English News.

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