IMF urges Pakistan to remove sales tax exemption on locally manufactured hybrid electric vehicles
Business
IMF has urged Pakistan to end the sales tax exemption on locally manufactured hybrid vehicles and motorcycles, proposing an 18% tax rate starting from the next fiscal year, which could raise prices.
ISLAMABAD (Dunya News) – The International Monetary Fund (IMF) has urged Pakistan to remove the sales tax exemption on locally manufactured hybrid electric vehicles and motorcycles.
According to sources, the IMF has urged the government to impose the standard 18% sales tax rate on these vehicles from the upcoming fiscal year.
Currently, hybrid electric vehicles produced locally benefit from tax exemptions under the Eighth Schedule of the Sales Tax Act. However, the IMF has suggested that these exemptions be removed in discussions with the Ministry of Industries and Production.
The IMF proposed that hybrid vehicles and bikes be removed from the Eighth Schedule and brought under the normal tax regime.
As per existing laws, locally manufactured hybrid electric vehicles under 1800 cc are subject to a 8.5% sales tax, while vehicles ranging from 1801 cc to 2500 cc are taxed at 12.75%.
The government had previously extended a tax exemption on hybrid vehicles and bikes until June 30, 2026, but under the new proposal, these exemptions would be lifted starting from the next financial year.
This move by the IMF is expected to increase the prices of hybrid vehicles and motorcycles, which could have an impact on consumers and the local automotive industry.
