ISLAMABAD: Prime Minister Shehbaz Sharif gave approval for major tax relief for new energy vehicles (NEVs). Premier announced this relief under the proposed five-year Auto Policy for 2026-31.
Under the plan, NEVs, completely knocked down kits, parts, inputs and raw materials will face a one percent sales tax. Moreover, NEVs will receive exemptions from federal excise duty, Capital Value Tax and withholding tax. The government will also increase the financing limit for NEV purchases from Rs3 million to Rs10 million.
Meanwhile, the maximum loan period will rise from three years to five years. Customs duty on imported charging stations will remain at one percent.
The policy will also support battery swap stations through viability gap funding to encourage wider adoption of electric vehicles.
BEVs receive top tax preference
The policy will provide the most favorable tax treatment to battery electric vehicles (BEVs). Range extended electric vehicles (REEVs) and plug-in hybrid electric vehicles (PHEVs) will receive the next levels of support.
However, the prime minister directed officials to treat hybrid electric vehicles and conventional vehicles equally regarding duties and taxes.
During Wednesday’s meeting, Sharif also ordered separate treatment for REEVs and PHEVs instead of grouping them with BEVs.
Changes target conventional vehicles
Additionally, the prime minister ordered the removal of the proposed federal excise duty on conventional cars below 1,000cc.
He also approved reducing customs duty on all cars from 30 percent to 15 percent during the fifth policy year.
The government will implement the revised rates from the current year to offset delays and align the policy with the National Tariff Policy.
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