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The Federal Board of Revenue (FBR) has officially notified the NEV adoption levy, targeting internal combustion engine (ICE) vehicles. The new taxation framework aims to promote energy-efficient and electric alternatives by discouraging reliance on conventional fuel-powered vehicles.
The notification comes after the government announced its comprehensive New Energy Vehicle (NEV) Policy for 2025–30, targeting a transformative shift in the country’s transport sector. The policy aims to make 30% of all new vehicle sales electric by 2030.
According to the First Schedule of the Finance Act, the NEV adoption levy applies to both locally assembled and imported ICE motor vehicles.
Manufacturers will pay 1% ad valorem of the invoice price (inclusive of duties and taxes) for ICE vehicles with engine capacity below 1300cc. Importers of such vehicles will also be charged 1% of the assessed value.
Rate of New Energy Vehicle Adoption Levy as per the First Schedule to the Finance Act, 2025
| S. No. | Motor vehicle category | Levy to be paid | Rate of Levy |
| 1 | All internal combustion engine motor vehicles assembled or manufactured in Pakistan with engine capacity less than thirteen hundred cubic centimeters | Manufacturer | One per cent ad valorem of invoice price inclusive of duties and taxes.
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| 2 | All internal combustion engine motor vehicles imported in Pakistan with engine capacity less than thirteen hundred cubic centimeters | Person importing internal combustion motor engine vehicle | One per cent ad valorem of assessed value inclusive of duties and taxes.
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| 3 | All internal combustion engine motor vehicles assembled or manufactured in Pakistan with engine capacity from thirteen hundred cubic centimeters to eighteen hundred cubic centimeters. | Manufacturer | Two per cent ad valorem of invoice price inclusive of duties and taxes.
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| 4 | All internal combustion engine motor vehicles imported in Pakistan with engine capacity from thirteen hundred cubic centimeters to eighteen hundred cubic centimeters. | Person importing internal combustion motor engine vehicle | Two per cent ad valorem of assessed value inclusive of duties and taxes.
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| 5 | All internal combustion engine motor vehicles assembled or manufactured in Pakistan with engine capacity of more than eighteen hundred cubic centimeters. | Manufacturer | Three per cent ad valorem of invoice price inclusive of duties and taxes.
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| 6 | All internal combustion engine motor vehicles imported in Pakistan with engine capacity of more than eighteen hundred cubic centimeters. | Person importing internal combustion motor engine vehicle. | Three per cent ad valorem of assessed value inclusive of duties and taxes.
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| 7 | A bus and truck with an internal combustion engine assembled or manufactured in Pakistan. | Manufacturer | One per cent ad valorem of invoice price inclusive of duties and taxes.
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| 8 | A bus and truck with an internal combustion engine imported in Pakistan. | Person importing internal combustion engine motor vehicle. | One per cent ad valorem of assessed value inclusive of duties and taxes.
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For vehicles with engine capacity between 1300cc and 1800cc, both manufacturers and importers will be charged 2% ad valorem. Similarly, for ICE vehicles exceeding 1800cc, a 3% ad valorem levy will apply to both local and imported units.
The NEV adoption levy in Pakistan is also applicable to buses and trucks. Imported commercial vehicles will be taxed at 1%, while locally assembled ones will incur the same rate.
This levy reflects the government’s broader strategy to shift towards sustainable transportation and meet its climate goals.
