The government is introducing a new tax on petrol and diesel vehicles—an additional 3% to 5%—to fund Pakistan’s Electric Vehicle (EV) transition.
Purpose:
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Generate Rs25–30 billion per year for an Electric Vehicle Fund
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Support EV subsidies, charging infrastructure, and clean transport research
How It Affects Car Owners
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All petrol/diesel vehicles, whether imported or locally assembled, will be taxed more.
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The sales tax on small cars (under 850cc) may jump from 12.5% to 18%.
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Withholding taxes on larger vehicles (based on engine capacity) could increase beyond existing rates:
| Engine Size (cc) | Current Tax Rate |
|---|---|
| 1300–1600 | 2% |
| 1601–1800 | 3% |
| 1801–2000 | 5% |
| 2001–2500 | 7% |
| 2501–3000 | 9% |
| Above 3000 | 12% |
These rates could climb even further, making mid- to high-end cars significantly more expensive.
Why It Matters
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The EV Fund could total Rs125–150 billion in five years.
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Funds will kick-start EV infrastructure and reduce dependence on fossil fuels.
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The government is tightening tax exemptions and aiming for wider tax net coverage.
Bottom Line
While car ownership will get costlier, especially for petrol/diesel users, the long-term goal is to promote cleaner energy, reduce emissions, and modernize transportation. For many, though, the short-term burden of higher taxes might outweigh the future benefits—at least until EV-s become more affordable and accessible.
