The Pakistan government is planning to reduce the sales tax on hybrid electric vehicles (HEVs) from 25% to 18%. This change aims to make these fuel-efficient cars more affordable for buyers and support cleaner transport options. A proposal has been sent to the Finance Division and needs approval from the federal cabinet to take effect.
This move comes soon after the Finance Act 2026 ended a special lower tax rate. On July 1, 2026, the sales tax on hybrids jumped from 8.5% to 25%. The sudden increase made hybrid cars much more expensive, slowing down sales and worrying car dealers. Industry experts warned that high prices would push people back to regular petrol cars.
Hybrid vehicles combine a petrol engine with an electric motor. They use much less fuel, especially in city traffic, and produce fewer harmful emissions. In Pakistan, where fuel imports are a big burden on the economy, hybrids help save foreign money and reduce air pollution. Popular models like the Toyota Corolla Cross Hybrid, Hyundai Elantra Hybrid, Haval H6 HEV, and MG HS PHEV could become cheaper if the tax cut is approved.
Lower taxes would encourage more people to buy hybrids. This supports the government’s goals for better energy efficiency and a shift toward electric mobility. Car makers and dealers have welcomed the proposal, saying it will help local assembly and create more choices for customers.
Experts believe the tax reduction will revive demand after recent uncertainty. Hybrids offer good fuel savings, lower running costs, and a smoother drive. For Pakistan, promoting these vehicles is a practical step toward greener roads while keeping cars affordable for middle-class families. The final decision from the cabinet is awaited with high hopes from the auto sector.