Pakistan’s government has given a welcome tax break to buyers of locally made hybrid cars. The sales tax on hybrid electric vehicles assembled in the country with engines of up to 2,000cc has been reduced from 25% to 18%.
The change was announced through official notification S.R.O. 1525(I)/2026 issued on 13 September 2026 by the Finance Division. It came into force the same day. The new rule removes these vehicles from the higher tax bracket that had applied under earlier regulations.
Until the end of June 2026, hybrids enjoyed much lower concessional rates of about 8.5% (slightly higher for some larger engines). When those special rates expired without extension, the standard 25% sales tax took effect from 1 July 2026. This sudden jump made hybrids costlier and slowed sales, with some companies even pausing deliveries while waiting for clearer policy.
Only locally manufactured hybrids up to the 2,000cc limit qualify for the new 18% rate. Popular models assembled in Pakistan, such as certain Toyota Corolla Cross hybrids, Haval H6 and Jolion hybrids, Hyundai Elantra Hybrid, Kia Sportage Hybrid and Honda HR-V e:HEV, are expected to benefit. Hybrids with larger engines remain outside this relief.
The cut should ease the tax load on eligible vehicles and may lead to somewhat lower prices for customers, though final retail prices will depend on the manufacturers. The step comes as the government continues work on a new auto policy and looks for ways to support cleaner transport options.