Islamabad, June 18, 2025: The federal government has withdrawn a plan to raise the sales tax on hybrid cars with engine sizes up to 1800cc. If the proposal have been implemented, it would have generated an extra Rs. 7 billion in revenue.
As per the initial budget plan, the sales tax on such hybrid cars was to be increased from 12.5 percent to 18 percent. However, after examination by the National Assembly’s Standing Committee on Finance, the proposed hike has been reversed. The existing 12.5 percent rate will continue to apply.
READ MORE: Senate Committee Opposes Tax Hike on Electric and Hybrid Cars
This is the second occasion within a year where a proposed tax increase on hybrid automobiles has been rolled back before receiving final budget approval. According to the current auto sector policy, the sales tax rate on hybrid vehicles cannot be revised before June 2026.
READ MORE: Senate Opposes New Tax on Small Cars
Nonetheless, the government has retained its proposal to raise the sales tax on small vehicles (up to 850cc) from 12.5 percent to 18 percent.
