Electric vehicle (EV) prices in Pakistan could increase if the government withdraws the existing 1% sales tax concession and applies the standard 18% sales tax, following concerns raised by the International Monetary Fund (IMF). According to sources, Pakistan and IMF are continuing discussions under the ongoing loan programme, while the government reviews the draft Auto Policy 2026 to 2031. IMF has reportedly questioned the preferential tax treatment given to EVs, arguing that such vehicles should not receive a major sales tax concession. The matter therefore sits at the point where a sector policy under review meets the conditions being discussed under the loan programme, and the outcome will decide how buyers of EVs are taxed in the coming period.
Under the proposal being considered, sales tax on EVs could rise from 1% to 18%, and a similar increase is also being considered for EV charging stations. The effect on buyers can be seen in a simple example, since for an EV priced at Rs. 10 million, sales tax would rise from around Rs. 100,000 to Rs. 1.8 million, which increases the tax burden by Rs. 1.7 million. The same rate change for charging stations would apply to the infrastructure that EV owners depend on, so the proposal reaches both the vehicles and the facilities used to power them, and it is not limited to the purchase price of a car alone.
The proposed change would mark a shift from the draft Auto Policy 2026 to 2031, which retained the 1% sales tax rate for new energy vehicles in order to support EV adoption and reduce dependence on imported fuel. That draft treated the lower rate as a tool for encouraging buyers to move towards electric transport, while the position now under discussion questions whether such a concession should continue at all. The difference between the two approaches explains why the issue has drawn attention, since the draft policy and the discussions with the IMF currently point in separate directions on how EVs should be taxed.
However, the proposed increase has not been finalized or officially notified, and nothing has been announced as a confirmed change to the tax rate. The Auto Policy remains subject to further discussions between Pakistan and IMF, and it also requires approval by the government before it can take effect. Until those steps are completed, the 18% rate stays a proposal under consideration, and the final decision will determine whether the 1% concession for EVs and EV charging stations continues or is replaced by the standard rate applied to other goods.
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