GST confusion hits hybrid vehicles

KARACHI: Confusion surrounds the fate of the general sales tax (GST) on hybrid vehicles following theunveilingof the FY27 budget. which is set to impose a higher tax after the current auto policy expires on June 30.

As most of the auto assemblers did not respond to the query about the GST rate,. Finance Minister Muhammad Aurangzeb also did not disclose anything in his budget speech, one of the local assemblers, who asked not to be named, said that stakeholders have been regularly holding discussions with policymakers on the GST issue.

It is not clear whether the government will slightly jack up the GST or maintain it under the pressure of auto assemblers. he said.

The International Monetary Fund is also reportedly forcing the government to raise the GST,. the assembler said he cannot confirm this development related to the IMF pressure.

Topline Securities Ltd said that hybrid vehicles are now subject to GST rates of 18pc (up to 1,800cc). 25pc (1,801cc-2,500cc), compared to the previous rates of 8.5pc and 12.75pc, respectively.

The brokerage house said that these concessional tax rates were already scheduled to expire in FY26 under the Auto Industry Development. Export Policy (AIDEP).

Hybrid vehicles have been in high demand for the last two years, with appetite rising as petrol. diesel prices reached unprecedented levels in the wake of soaring crude oil prices following the start of the US-Israeli war on Iran on Feb 28.

Hybrid lovers will get a serious price shock if GST rises to 18pc and 25pc. However, much will depend on the government, which certainly needs to meet a higher revenue target.

On the continuation of the reduced GST of 1pc on the import of CKD kits for EV cars. LCVs, Topline Securities said the exemption for the import of CKD kits for locally assembled electric small cars/SUVs up to 50 kWh and LCVs up to 150 kWh has been extended to June 30, 2027.

The extension provides continued tariff relief to EV assemblers, reducing production costs. improving price competitiveness, while supporting broader EV adoption and new model introductions in entry-level passenger and commercial segments.

Overall, it strengthens near-term EV penetration prospects for players while improving visibility for investment in local assembly and related infrastructure.

Import of vehicles exceeding 2,000cc and below 3,000cc will be subject to 40pc FED and exceeding 3000cc at 41pc. Imported EVs with over Rs20m. less than Rs30m will be subject to 30pc FED and exceeding Rs30m will be subject to 40pc FED.

Published in Dawn, June 14th, 2026