The federal government has proposed major duty and tax reductions on hybrid vehicles under the draft Auto Policy 2026–31. The proposed changes could gradually lower import duties on several categories of hybrid vehicles over five years.
The final draft has been presented to Prime Minister Shehbaz Sharif for consideration. If approved, the proposed Auto Policy will remain in effect from 2026 through 2031.
Hybrid Vehicle Import Duties May Fall
Under the draft policy, the government plans a phased reduction in duties on imported hybrid vehicles.
For hybrid vehicles above 1,800cc, import taxes are proposed to decline by 20% over five years. Meanwhile, the duty on hybrid vehicles above 1,801cc could gradually fall from 50% to 30%.
The draft also covers hybrid vehicles with smaller engine capacities.
For vehicles between 1,501cc and 1,800cc, the proposed duty could decrease from 50% to 30%. The reduction would take place gradually over the five-year policy period. Similarly, hybrid vehicles between 851cc and 1,000cc could see their duty reduced from 50% to 30%.
The government has also proposed a similar reduction for smaller hybrid vehicles. For hybrid vehicles with engine capacities up to 800cc, the duty could fall from 50% to 30%.
Hybrid Trucks and Buses Also Included
The proposed Auto Policy also covers hybrid commercial vehicles. Under the draft, the duty on hybrid trucks could be reduced from 30% to 15% over five years.
Similarly, hybrid buses could receive a duty reduction from 30% to 15%.
The government is also considering a significant reduction for hybrid light commercial vehicles. Their duty could decline from 60% to 30% under the proposed policy. These reductions would also be introduced gradually during the five-year policy period.
New Auto Policy Targets Fuel-Efficient Vehicles
The proposed measures are aimed at encouraging the use of hybrid and more fuel-efficient vehicles. At the same time, the government intends to gradually restructure Pakistan’s automotive import and taxation framework.
The proposed duty reductions cover both passenger vehicles and commercial vehicles. However, the measures remain part of the draft Auto Policy 2026–31.
The final policy is currently under consideration by Prime Minister Shehbaz Sharif. If approved, the changes would introduce a phased approach to reducing duties on hybrid vehicle imports.
The proposal could therefore reshape the taxation structure for hybrid vehicles between 2026 and 2031. For now, the proposed reductions remain subject to consideration and final approval.
