Pakistan’s Ministry of Industries has reportedly opposed a proposal to impose an 18% GST on EVs, arguing that lower taxes would better support the growth of clean transportation in the country.
Officials are instead recommending a reduced GST rate of 1% under the upcoming auto policy. They believe stronger incentives are needed to encourage the adoption of electric vehicles, including electric cars, buses, motorcycles, and commercial transport.
According to authorities, promoting EVs could help reduce fuel dependence, lower emissions, and support long-term environmental goals. They argue that higher taxation may slow down consumer interest in switching to electric mobility.
Government representatives also pointed out that hybrid vehicles currently benefit from comparatively lower taxes, creating an imbalance in incentives between different categories of environmentally friendly transport.
Another concern raised during discussions involves differences in taxation between imported EV parts and locally produced components. Officials have proposed introducing a uniform 1% GST across the entire EV supply chain to support manufacturers and create consistency in pricing.
The matter was reportedly discussed with IMF as part of broader talks on tariff reforms and economic policies. Discussions also included long-term plans to gradually revise tariffs for Pakistan’s automobile sector under the National Tariff Policy.
Industry experts believe supportive tax policies could help attract investment into electric mobility and encourage local manufacturing. They say affordable EVs may increase adoption rates and strengthen Pakistan’s transition toward modern transport technologies.
The ongoing discussions highlight the government’s efforts to balance revenue generation with industrial growth, while supporting cleaner energy solutions and the future development of Pakistan’s automotive sector.
