The federal government is considering withdrawing sales tax exemptions on electric vehicles (EVs), electric motorcycles, and electric rickshaws as part of the upcoming Federal Budget 2026-27, according to official sources.
The proposed move is part of a broader effort to increase tax revenues and reduce exemptions across various sectors of the economy. Under the plan being reviewed, tax relief currently available on electric cars, motorcycles, rickshaws, cargo vehicles, and electric trucks could be abolished.
Sources said that even small electric vehicles may no longer qualify for sales tax exemptions if the proposal receives final approval. The government is also evaluating the removal of tax concessions on EV components and spare parts, a step that could increase the cost of manufacturing and assembling electric vehicles locally.
In addition, hybrid vehicles may lose existing sales tax incentives as authorities seek to expand the tax base and generate additional revenue.
The proposed fiscal changes extend beyond the automotive sector. Imported computers and laptops, stationery products, packaged food items, sweets, bakery products, and other consumer goods are also being considered for a possible increase in sales tax. Officials are reportedly examining a 10 percent rise in sales tax on several imported items.
The government is also reviewing concessional tax rates on imported industrial machinery used in former FATA and PATA regions, signaling a wider policy shift aimed at reducing tax exemptions and improving revenue collection.
The proposals are being discussed as part of ongoing economic reforms and efforts to meet revenue targets. The Federal Board of Revenue (FBR) is currently reviewing multiple exemption categories ahead of the budget announcement.
If approved, the withdrawal of tax incentives could have a significant impact on Pakistan’s emerging electric mobility sector, which has benefited from government support aimed at encouraging cleaner transportation and reducing dependence on fossil fuels.
