FBR Cuts Hybrid Sales Tax to 18% for Local HEVs

The Federal Board of Revenue has reduced the sales tax on locally manufactured Hybrid Electric Vehicles. These are cars with engines up to 2000cc. The tax drops from 25 percent to 18 percent.

The change came through official notice S.R.O. 1525(I)/2026. It started on September 13 2026.

Why the Tax Was High Before

Earlier the special lower tax rates for hybrids ended on June 30 2026. After that date the tax rose to the full 25 percent. That made many hybrid models much more expensive overnight.

The new 18 percent rate brings partial relief.

Which Vehicles Get the Benefit

Vehicles Covered

The reduction applies only to regular Hybrid Electric Vehicles that are made or assembled in Pakistan and have engines of 2000cc or less.

Vehicles Not Covered

It does not cover plug-in hybrid vehicles. PHEVs still face the full 25 percent sales tax.

How Car Makers Responded

Car makers reacted quickly. Hyundai Nishat Motor lowered the prices of its hybrid models that qualify.

The Elantra Hybrid, Tucson Hybrid and Santa Fe Hybrid all became cheaper. Price cuts ranged from about six hundred thirty nine thousand rupees to one point four million rupees depending on the model. The largest saving went to the top Santa Fe Hybrid version.

What This Means for Buyers

These price cuts give real help to people who want a hybrid car. Hybrids use both petrol and electric power. They often use less fuel in city driving. Lower tax means lower showroom prices. That can make the total cost of owning the car more manageable.

Still the relief is limited. The new rate of 18 percent is higher than the old special rates that used to apply before June. Those older rates were much lower. The government has not brought those old rates back. Buyers will still pay more tax than they did in the first half of the year.

Link to the Wider Car Market

The timing of the change also matters. Pakistan’s car market slowed in August. Sales of passenger cars dropped more than twenty one percent from July. Uncertainty about the next auto policy and tax rules for hybrids and electric vehicles played a part. Buyers waited to see what the government would do. The new tax notice may help clear some of that doubt for regular hybrid models.

Important Points for Buyers

For people looking at plug-in hybrids the picture stays the same. Those vehicles keep the 25 percent sales tax. The notice does not give them the same cut.

Car dealers and makers are now updating their price lists. Buyers should ask for the latest ex-factory prices and check what other charges apply. Registration insurance and freight still add to the final cost.

Conclusion

In short the sales tax on qualifying local hybrid cars is now 18 percent. The change is already in force. It offers measurable relief after months of higher costs. Yet it stops short of full restoration of the earlier lower rates and leaves plug-in hybrids outside the benefit. Buyers interested in hybrid models should review the updated prices and decide based on their budget and needs.For more updates, visit DrivePK.com