lEectric vehicle (EV) prices in Pakistan could increase significantly if the government withdraws the existing 1% sales tax concession and applies the standard 18% sales tax following concerns raised by the International Monetary Fund (IMF).
According to sources, Pakistan and the IMF are continuing discussions under the ongoing loan programme, while the government reviews the draft Auto Policy 2026–31. The IMF has reportedly questioned preferential tax treatment for EVs, arguing that such vehicles should not receive a major sales tax concession.
Under the proposal being considered, sales tax on EVs could increase from 1% to 18%. A similar increase is also being considered for EV charging stations. For an EV priced at Rs. 10 million, sales tax would rise from around Rs. 100,000 to Rs. 1.8 million, increasing the tax burden by Rs. 1.7 million.
The proposed change would mark a shift from the draft Auto Policy 2026–31, which retained the 1% sales tax rate for new-energy vehicles to support EV adoption and reduce dependence on imported fuel.
However, the proposed increase has not been finalized or officially notified. The Auto Policy remains subject to further discussions between Pakistan and the IMF and approval by the government.
