ISLAMABAD – Some relief for Pakistan’s hybrid car buyers as Federal Board of Revenue (FBR) axes sales tax on locally assembled hybrid vehicles with engines of up to 2,000cc, potentially opening the door to lower prices in coming weeks.
The sales tax has been brought down from 25% to 18%, with the new rate taking effect from September 13, 2026. The decision was notified by the FBR on Monday through S.R.O. 1525(I)/2026, which amends the earlier sales-tax framework governing hybrid vehicles.
Under the latest tweaks, locally manufactured hybrid electric vehicles with engine capacities of 2,000cc or below have been excluded from the provision that had pushed them into the 25% sales tax bracket. For buyers, the change could prove significant, particularly after hybrid vehicles lost their previous tax concession and became substantially more expensive.
Which hybrid cars are in line for relief?
The move covers locally manufactured or CKD-assembled hybrid vehicles with engines no larger than 2,000cc. That puts several well-known names in Pakistan’s auto market in the spotlight.
| Models | Engine capacity |
|---|---|
| Toyota Corolla Cross 1.8 HEV | ~1,798cc |
| Toyota Corolla Cross 1.8 HEV X | ~1,798cc |
| Haval H6 HEV | ~1,499cc |
| Haval H6 PHEV | ~1,499cc |
| Haval Jolion HEV | ~1,499cc |
| Hyundai Elantra Hybrid | ~1,580cc |
| Kia Sportage L HEV | ~1,598cc |
| Honda HR-V e:HEV | ~1,498cc |
| MG HS PHEV / Hybrid+ | ~1,498cc |
| Jaecoo J7 PHEV (SHS) | ~1,499cc |
| Chery/Jaecoo qualifying PHEV models | Generally ~1,500cc |
Pakistan’s hybrid car market has gone through a sharp tax roller coaster. Hybrid vehicles previously benefited from a concessional 8.5% sales tax rate. That facility expired, and the vehicles were subsequently brought under the relevant provisions of SRO 297(I)/2023, resulting in the standard 25% sales tax.
Expected EV, Hybrid Car Prices in Pakistan from July 2026 after New Taxes
The latest decision cuts that rate to 18%, giving qualifying hybrids a seven-percentage-point tax reduction. The relief, however, does not automatically mean every qualifying car will become cheaper by the same amount. The actual impact on showroom prices will depend on whether manufacturers pass the tax saving on to customers.
Other locally assembled hybrids could also qualify, provided they meet the 2,000cc engine-capacity limit and other requirements under the notification.
FBR’s decision does not mean every hybrid vehicle in Pakistan has received a tax cut. The concession is tied to both engine capacity and local manufacturing.
Larger-engine hybrids falling above the 2,000cc threshold remain outside the relief. Certain larger SUVs, including applicable Tank 500 or Palisade variants exceeding the limit, would therefore not qualify. Fully imported CBU hybrid vehicles are also not covered simply because they use hybrid technology.
A lower sales tax gives manufacturers room to reduce prices, but the final saving will depend on their pricing decisions. The industry will also have to account for other duties, taxes, production expenses and margins before deciding how much of the benefit reaches consumers.
Still, the timing is important. The move comes after the earlier shift to the 25% sales tax had pushed prices of several hybrid vehicles sharply higher, with increases of around Rs1 million to Rs2 million or more reported on some models.
Big surge in Hybrid Car Prices expected as 25% Sales Tax comes into effect
