ISLAMABAD: The federal government has decided to impose a Federal Excise Duty (FED) on luxury electric vehicles (EVs) under the 2026-27 federal budget, with the new tax measures set to take effect from July 1.
Under the proposed taxation framework, only electric vehicles priced above Rs20 million will be subject to the FED. Meanwhile, EVs valued below the threshold will remain exempt, ensuring that lower-priced electric vehicles are not affected by the new measure.
The proposal was discussed during a meeting of the National Assembly’s Finance Committee, where officials from the Federal Board of Revenue (FBR) briefed lawmakers on the government’s taxation plans. FBR officials stated that the excise duty on luxury EVs has been set at a lower rate than the duty applicable to conventional internal combustion engine (ICE) vehicles.
However, the proposal faced criticism from several members of the committee, who questioned both the timing of the tax and the country’s readiness to support wider electric vehicle adoption.
Committee member Hina Rabbani argued that electric vehicles are already significantly more expensive than conventional models. She said imposing a 30% duty on high-end EVs could discourage investment in a sector that is advancing rapidly through continuous technological innovation.
Sharmila Farooqui also called on the government to adopt a clear and consistent electric vehicle policy. She urged policymakers to avoid sending mixed signals if the objective is to promote cleaner transportation and accelerate the transition to electric mobility.
Meanwhile, Shahida Akhtar highlighted the lack of charging infrastructure across the country. She stressed that expanding a nationwide network of charging stations should be a priority, noting that limited infrastructure remains a major obstacle to the growth of Pakistan’s electric vehicle market.
The proposed FED will become effective on July 1, 2026, following the completion of the legislative process as part of the federal budget for the new fiscal year.
