Hybrid sales tax cut to 18%, yet MG ZS hybrid goes up Rs 400,000 on 1 October

The Federal Board of Revenue has cut sales tax on locally manufactured hybrid electric vehicles up to 2,000cc from 25% to 18%. SRO 1525(I)/2026, dated 13 September 2026, took effect immediately. Three days later, MG Motors Pakistan announced higher prices for its ZS hybrid from 1 October, citing the revised sales tax on hybrids.

What the SRO changes

• Before 30 June 2026: a concession charged 8.5% on hybrids up to 1,800cc and 12.75% on hybrids from 1,801cc to 2,500cc.
• 1 July to 12 September 2026: the concession lapsed and hybrids were taxed at 25%.
• From 13 September 2026: locally manufactured hybrids up to 2,000cc pay the standard 18% rate.

The SRO amends SRO 297(I)/2023 and was issued under section 3(2)(b) of the Sales Tax Act, 1990. It carves qualifying hybrids out of the notification's Table-II, which carries the higher rate. Imported (CBU) hybrids and hybrids above 2,000cc do not qualify.

What 7 points is worth

Here is an illustration. On a hybrid with a value of Rs 7 million before sales tax, 25% comes to Rs 1.75 million and 18% to Rs 1.26 million, a difference of Rs 490,000. Showroom prices also include other duties and the maker's margin, and the SRO does not force automakers to pass the saving on.

Daily Pakistan lists locally assembled hybrids at or under 2,000cc: Toyota Corolla Cross HEV, Haval H6 and Jolion HEV, Hyundai Elantra Hybrid, Kia Sportage L HEV, Honda HR-V e:HEV, MG HS and Jaecoo J7 PHEV. The SRO itself names no models.

MG ZS: up Rs 400,000

These are ex-factory prices as reported by ProPakistani on 16 September. Registration and token tax come on top; see our car registration tax calculator.

Auto policy: extra duties to go

Haroon Akhtar Khan, the Prime Minister's special assistant, said this week that the new auto policy is almost complete and will remove additional customs duties and regulatory duties. No date has been given. Nukta reports that the draft Auto Policy 2026-31 gives hybrids the same tax treatment as petrol cars and more relief to battery electric vehicles.

What to do if you are buying

1. Ask the dealer for a price list issued after 13 September, and check that the invoice shows sales tax at 18% if the car is locally made and 2,000cc or under.
2. If you have already paid in full at a 25% price, ask the company in writing how it will treat the difference.
3. MG ZS buyers who want the pre-October price need to book by 30 September under MG's offer.
4. Financing? Compare instalments on the car loan calculator. The 12-month KIBOR was 12.30% on 15 September.
5. Work out the yearly charge with the token tax calculator.