Budget 2025-26: Hybrid Car GST May Rise from 8.5% to 18%

Jawad

10 Jun 2025

180

Budget 2025-26: Hybrid Car GST May Rise from 8.5% to 18%

In a significant policy shift, the Budget 2025-26 introduces a sharp increase in the GST on hybrid cars, raising it from 8.5% to a steep 18%. This move marks a substantial change in the government’s taxation strategy for Hybrid Electric Vehicles (HEVs), which were previously supported through a lower tax rate to promote fuel efficiency and reduce dependency on fuel imports.

Car Brand	Model	Engine	Price 8.5% GST (PKR)	Price 18% GST (PKR)	Expected Increase (PKR)
Haval	H6 HEV	1.5l	11,749,000	12,777,714	1,028,714
Haval	Jolion HEV	1.5l	9,295,000	10,108,848	813,848

Toyota	Corolla Cross 1.8 HEV	1.8l	8,999,000	9,786,931	787,931
Toyota	Corolla Cross 1.8 HEV X	1.8l	9,449,000	10,276,332	827,332

Hyundai	Elantra Hybrid	1.6l	9,700,000	10,549,309	849,309
	Tucson Hybrid Smart	1.6l	10,999,000	11,962,046	963,046
	Tucson Hybrid Signature	1.6l	11,999,000	13,049,604	1,050,604
	Santa Fe Smart	1.6l	12,490,000	13,583,594	1,093,594
	Santa Fe Signature	1.6l	13,899,000	15,115,963	1,216,963

Kia	Sportage L HEV	1.6l	10,999,000	11,962,046	963,046
	KIA Sorento 1.6T HEV FWD	1.6l	14,699,000	15,986,009	1,287,009
	KIA Sorento 1.6T HEV AWD	1.6l	15,999,000	17,399,834	1,400,834

MG	HS PHEV	1.5l	9,699,000	10,548,221	849,221

From Incentive to Increase

For the past year, the government maintained a reduced HEV GST rate of 8.5%, which had made hybrid vehicles a more attractive option for environmentally conscious buyers. This favorable tax policy was also seen as a push to encourage the adoption of cleaner transportation across Pakistan. Dealers and importers had aligned their pricing strategies and stock planning based on this consistent rate.

However, the latest Pakistan auto budget has reversed that stance. With the sudden announcement of an HEV tax increase, the GST on cars, specifically on HEVs, has more than doubled—shocking industry stakeholders and potential buyers alike. The decision has left many questioning the rationale behind this abrupt change, especially when hybrid technology is still gaining traction in the market.

Impact on Buyers and Dealers

The updated vehicle tax budget will directly impact hybrid car prices. Buyers now face a higher financial barrier, which may dampen interest in these fuel-efficient vehicles. A car GST hike of this magnitude can significantly alter purchasing decisions, particularly for middle-class consumers who saw HEVs as a long-term investment in fuel savings.

Dealerships and importers will also be affected. Their existing inventory, priced based on the old hybrid vehicle tax rate, will need revaluation. Adjustments in pricing strategies and stock management are inevitable, and sales may take a hit as customers reconsider their options.

The government has yet to provide a detailed explanation for the GST on hybrids increase. While some speculate that it’s a revenue-generating measure, others believe it's an attempt to harmonize hybrid car taxation with that of regular vehicles. Either way, this shift in policy could slow down the growth of hybrid adoption in Pakistan, at least in the short term.

Budget 202526 Hybrid Car GST HEV Tax Increase GST on Hybrids Hybrid Vehicle Tax Car GST Hike HEV GST Rate Pakistan Auto Budget GST on Cars Vehicle Tax BudgetIn a significant policy shift the Budget 202526 introduces a sharp increase in the GST on hybrid cars raising it from 85 to a ste

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