Pakistan may soon see higher prices for locally manufactured hybrid and electric cars and bikes, as the International Monetary Fund (IMF) has asked the government to impose a standard 18% General Sales Tax (GST) on these vehicles.
The demand comes as part of conditions under Pakistan’s ongoing IMF loan programme, with the Fund pushing for the removal of tax exemptions and reduced rates currently enjoyed by hybrid and electric vehicles under the Sales Tax Act. At present, many locally made hybrids and EVs benefit from lower GST slabs or exemptions, aimed at encouraging clean transportation and local manufacturing.
If implemented, the move would increase vehicle prices, potentially slowing adoption of electric and hybrid technology and affecting local assemblers who relied on tax incentives to keep costs competitive. While the government has not made a final decision, the proposal is expected to be debated ahead of the next federal budget, with industry stakeholders warning of negative impacts on investment and climate goals.
The plan is part of a broader IMF push to broaden Pakistan’s tax base and reduce preferential treatments across sectors.
