The federal government has announced a Rs2.5 per litre carbon levy on petrol, diesel, and furnace oil in the 2025-26 budget, as part of efforts to reduce emissions and encourage cleaner energy alternatives. The levy will rise to Rs5 per litre in 2026-27, signaling a stronger push toward environmental sustainability.
Alongside the fuel levy, the government has proposed additional charges on petrol and diesel vehicles to incentivize a shift to electric vehicles (EVs). The budget also includes measures to prioritize EVs, including promoting electric motorcycles and rickshaws, while imposing levies on fuel-based vehicle sales and imports based on engine capacity.
Finance Minister Aurangzeb highlighted stricter enforcement of tax laws, including the confiscation of goods without proper tax stamps or barcodes. Provincial authorities will also be engaged to combat smuggling of non-duty paid cigarettes.
Further reforms include a 10% surcharge on external loan repayments, with provisions allowing the government to adjust the rate as needed. The budget also emphasizes customs modernization to improve revenue collection and curb illegal trade.
These measures align with the government’s broader Energy Vehicle Policy, aimed at reducing fossil fuel dependency and cutting carbon emissions. By increasing costs for conventional fuel vehicles while supporting EVs, officials hope to accelerate Pakistan’s transition to a greener economy.
