Hybrid cars in Pakistan are becoming more expensive following the Budget 2026-27. The government did not extend key tax breaks that expired on June 30, 2026. This has raised the total indirect tax burden on many hybrid vehicles to around 25%.
Under the previous policy, imported and some locally assembled hybrids enjoyed reduced sales tax rates, often 8.5% for smaller engines and up to 12.75% for larger ones. These concessions were granted under the Auto Industry Development and Export Policy (AIDEP). With the new Finance Act, hybrids now face standard General Sales Tax (GST) rates of 18% for engines up to 1,800cc and 25% for those between 1,801cc and 2,500cc.
This change mainly affects imported hybrid models popular in Pakistan, such as Toyota and Honda, as well as other premium options. Buyers can expect price increases of several lakhs of rupees depending on the model. For example, mid-range hybrids that were more affordable due to lower taxes may now cost noticeably more on the road.
Analysts believe this could slow down the shift to hybrid vehicles. Many people might choose smaller petrol cars or delay buying altogether. While the government continues to provide some support for pure electric vehicles (EVs) in certain categories, the removal of hybrid relief shows a focus on raising revenue. Pakistan needs more taxes to meet financial targets, including those linked to international agreements.