ISLAMABAD – The federal government is likely to hike tax on electricity and hybrid vehicles in upcoming budget for fiscal year 2026-27
According to ongoing discussions on tax proposals, authorities are considering significant changes in taxation on alternative energy and electric transport products.
Reports revealed that the International Monetary Fund (IMF) has refused to allow any new tax exemptions and has proposed increasing the General Sales Tax (GST) on electric vehicles from 1 percent to 18 percent.
Under the suggested plan, GST on hybrid vehicles could also be raised from 8% to 18%. In addition, solar panels may see a tax increase from 10% to 18%.
If approved, these measures are expected to substantially raise the prices of electric cars, motorcycles, rickshaws, trucks, and buses, as well as electric pickups, tractors, and double-cabin vehicles.
The proposed changes are still under review as part of broader budget preparations for the next fiscal year. Officials are evaluating various tax policy options while balancing revenue needs and sectoral impacts.
Meanwhile, the textile sector has urged the government to immediately release refunds worth 327 billion rupees and has also called for reductions in electricity, gas, and tax rates.
Industry representatives argue that delayed refunds and high utility costs are affecting competitiveness.
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