The International Monetary Fund has urged Pakistan to apply the full 18% sales tax on locally made hybrid and electric cars and motorcycles starting next fiscal year.
Sources say the IMF raised this point in talks with the Ministry of Industries and Production. The fund wants these vehicles taken off a special list that gives them lower rates, bringing them under the usual tax rules.
Right now, many locally assembled hybrid cars enjoy big tax breaks under the Eighth Schedule of the Sales Tax Act. These breaks were meant to help build a market for cleaner vehicles and cut fuel imports. The incentives run until June 30, 2026.
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For example, hybrid cars with engines up to 1,800cc pay just 8.5% sales tax. Larger ones up to 2,500cc pay 12.75%. Some models and electric bikes get even lower rates or none at all.
If Pakistan agrees to the IMF plan, these benefits would end sooner, from the 2026-27 budget year. That could push up prices for buyers and slow growth in the local auto sector.
