In a major policy shift under the Budget 2025-26, the government has proposed a significant increase in the General Sales Tax (GST) on hybrid electric vehicles (HEVs), raising it from the current 8.5% to a steep 18%.
Why This Matters
For the past year, HEVs enjoyed a reduced GST rate of 8.5%, introduced to promote fuel-efficient and environmentally friendly transportation. The lower tax was seen as a key move to encourage the adoption of hybrid vehicles and reduce dependency on imported fuel.
But this proposed hike—more than doubling the previous rate—has caught both consumers and industry insiders by surprise.
Impact on Car Prices
Here’s a comparison of how the new GST rate could affect popular hybrid car models in Pakistan:
| Brand | Model | Engine | Price @ 8.5% GST (PKR) | Price @ 18% GST (PKR) | Increase (PKR) |
|---|---|---|---|---|---|
| Haval | H6 HEV | 1.5L | 11,749,000 | 12,777,714 | 1,028,714 |
| 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 |
| 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 |
| Sorento 1.6T HEV FWD | 1.6L | 14,699,000 | 15,986,009 | 1,287,009 | |
| 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 |
What’s Behind the Sudden Change?
While the government hasn’t provided a detailed explanation for the proposed tax hike, analysts believe it may be part of a broader effort to boost revenue generation or to align hybrid vehicle taxation with that of conventional vehicles.
However, the change could have unintended consequences.
What It Means for Buyers and Dealers
- For car buyers: The cost of purchasing a hybrid vehicle is about to rise significantly, which may push many toward less fuel-efficient alternatives.
- For dealers and importers: Pricing strategies will need to be adjusted immediately, potentially disrupting sales forecasts and inventory planning.
Final Thoughts
While the shift toward higher GST on HEVs might help with short-term revenue goals, it risks stalling Pakistan’s transition toward cleaner and greener transportation. Many in the auto industry have voiced concerns that such a move could discourage environmentally conscious consumers and hamper momentum in the hybrid segment.
Stay tuned with Pulse Pakistan for further updates and insights on how the Budget 2025-26 will shape the automotive and economic landscape of the country.
