Pakistan’s Budget 2026-27 has introduced a tiered tax framework for electric vehicles, offering zero federal excise duty on affordable imported electric cars and SUVs while maintaining duties on premium models and providing targeted relief for local assembly, electric motorcycles, and commercial electric transport. The measures represent one of the most detailed and structured government interventions in Pakistan’s electric vehicle sector to date, reflecting a deliberate effort to balance consumer affordability, domestic manufacturing development, and fiscal revenue management within a single coherent policy framework.
The most significant change centres on federal excise duty rather than customs duty. Imported electric cars, electric SUVs, and electric pickup vehicles in completely built-up condition for personal use will face zero federal excise duty if their import value, including customs duty, does not exceed Rs 20 million. For vehicles valued above Rs 20 million and up to Rs 30 million, the federal excise duty rises sharply to 30 percent, and for those valued above Rs 30 million the rate climbs to 40 percent. This tiered structure effectively draws a clear line between mass-market electric vehicles, which the government is trying to make more accessible, and premium electric vehicles, which will face a significant luxury tax regardless of their clean energy credentials. Customs duty on imported electric four-wheelers, excluding vehicles valued above $50,000, will remain at 25 percent until June 30, 2027, meaning the zero federal excise duty for affordable models works in combination with the existing customs duty rather than replacing it.
For manufacturers and assemblers, the budget provides a different set of concessions. Companies planning to locally assemble or manufacture a specific electric four-wheeler variant can import up to 100 completely built-up units of that vehicle at 50 percent of the applicable customs duty rate, effectively halving the cost of the initial CBU imports that allow manufacturers to test market demand before committing to full local production. EV-specific completely knocked-down components for electric four-wheelers, electric vans, and light electric trucks will attract just 1 percent customs duty, with non-localized CKD parts at 10 percent and localized parts at 25 percent, creating a cost gradient that incentivises manufacturers to progressively source more components locally as production scales. Plant and machinery specifically designed for electric vehicle manufacturing will be allowed at zero customs duty on a one-time basis for new or expanded facilities, and inputs used by vendors and original equipment manufacturers for producing EV-specific parts will also be permitted at zero customs duty subject to Engineering Development Board approval.
Electric motorcycles receive targeted component support, with EV-specific CKD components including electric motors, battery chargers, switches, junction boxes, controllers, converters, and batteries carrying just 1 percent customs duty. Commercial electric transport is also addressed directly, with electric buses, trucks, and prime movers in completely built-up condition facing only 1 percent customs duty, and electric transport buses with 25 or more seats and electric trucks in completely built-up condition subject to just 1 percent sales tax. The Pakistan Accelerated Vehicle Electrification programme will provide subsidised financing for electric motorcycles and electric rickshaws, extending the budget’s EV support beyond import and assembly incentives into the consumer financing dimension that is ultimately what determines adoption rates in Pakistan’s price-sensitive two- and three-wheeler market.
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