WHAT IS THE TAX ON ELECTRIC VEHICLES(EV) IN PAKISTAN?

The adoption of Electric Vehicles (EVs) in Pakistan has seen a steady rise, supported by government policies offering tax exemptions and incentives under the Electric Vehicle Policy 2020–2025. As of 2025, Pakistan’s tax structure on EVs varies based on the type of vehicle, import or local manufacturing status, and battery specifications.

This guide provides a comprehensive update on the current taxes applicable to EVs, their exemptions, and benefits offered to buyers and manufacturers.

Types of Electric Vehicles in Pakistan

Electric vehicles are categorized into three main types:

1. Battery Electric Vehicles (BEVs):

   • Fully electric vehicles that operate solely on electricity stored in batteries.

   • No internal combustion engine involved.

2. Plug-in Hybrid Electric Vehicles (PHEVs):

   • Equipped with both an electric motor and a petrol/diesel engine.

   • Can be charged via plug-in stations.

3. Hybrid Electric Vehicles (HEVs):

   • Combine an internal combustion engine with an electric motor.

   • Batteries charge through regenerative braking, not external power.

Current Tax Structure on EVs in Pakistan (As of 2025)

The tax treatment of EVs varies between imported and locally manufactured vehicles:

1. Locally Manufactured EVs

• Sales Tax:

• 1% sales tax on light electric vehicles (up to 150 kWh for cars, and 50 kWh for 2- and 3-wheelers)

• Applies to passenger cars, 2-wheelers, 3-wheelers, and small commercial EVs

• Federal Excise Duty (FED):

• 0% (exempted under the EV Policy)

• Customs Duty on Parts:

• Only 1% import duty on EV-specific parts and assemblies

• Registration and Annual Fees:

• Exempted for EVs in the Islamabad Capital Territory (ICT)

• Some provinces have begun replicating these benefits

• Other Benefits:

• Reduced electricity rates for EV charging stations

• Access to future government subsidies and green financing

2. Imported EVs (Completely Built Units – CBUs)

• Customs Duty:

• Exempted on import of up to 100 four-wheel electric vehicles per manufacturer (under EV Policy quota)

• Beyond this quota, standard duty may apply as notified annually

• Sales Tax:

• Standard 17% for most EVs

• 1% sales tax applicable on light EVs up to 50 kWh (2- and 3-wheelers) and up to 150 kWh for 4-wheelers

• FED:

• 0% (as per EV Policy 2020–2025)

• Import Duty on Batteries & Charging Equipment:

• Reduced to 1%

• Registration Fee:

• Exempted in ICT; other provinces may charge minimal or zero fee

Key Benefits from Pakistan’s Electric Vehicle Policy (2020–2025)

Pakistan’s EV Policy aims to convert 30% of all new vehicles sold to electric by 2030. Key features include:

1. 1% Sales Tax on Locally Manufactured EVs

2. No FED on EV Manufacturing and Sale

3. No Customs Duty on Import of EV-Specific Plant & Machinery

4. 1% Import Duty on Batteries and Charging Equipment

5. 1% Import Tax on EV Spare Parts

6. Exemption from Registration and Annual Renewal Fees in ICT

7. Incentives for EV charging infrastructure

8. Special green number plates for EVs

9. 100% waiver on import duty for the first 100 CBU electric vehicles per assembler

Other Considerations

• Hybrid Vehicles (HEVs and PHEVs) are not eligible for all EV-specific exemptions and may still be subject to standard customs duty, FED, and higher sales tax unless specified.

• Motorcycles and Rickshaws powered by electricity are also eligible for the same tax reductions under EV Policy if registered as such.

• Commercial Vehicles: Electric buses and trucks are part of the government’s broader green transport goals and enjoy similar exemptions.