IMF wants 18% sales tax on electric cars: a Rs 10 million EV could cost Rs 17 lakh more

The IMF wants Pakistan to end the 1% sales tax on electric cars and charge the standard 18% instead, ARY News reported on Saturday 3 October, citing talks on the next tranche of the IMF loan. If that happens, the price of an electric car in Pakistan could rise by roughly a sixth: on a Rs 10 million EV, sales tax would go from Rs 100,000 to Rs 1.8 million.

What the IMF is asking for

Locally assembled electric vehicles with batteries of up to 50 kWh pay a reduced 1% sales tax, a concession that Daily Pakistan reported has been extended to 30 June 2027. Most other goods pay 18%. According to ARY News, the Fund told Pakistani officials during the review that the concession is discriminatory and that electric cars should be treated as luxury goods rather than goods that deserve a tax break. Daily Pakistan reported that the IMF prefers direct subsidies to tax concessions if the government wants to support EVs.

The dispute is not new. In June, PakWheels reported that the IMF had rejected the government's plan for a 1% sales tax on new energy vehicles for five years in the draft Auto Policy 2026-31, and wanted 18% across the board. ARY says officials now expect to revise the draft auto policy again. Nothing has been notified yet: today's prices still carry the 1% rate.

What it could cost you

Daily Pakistan lists the BYD Atto 2 and Atto 3, the MG ZS EV and Binguo, the Jaecoo J6 and the Omoda E5 among the cars affected. As a rough guide, if the whole ex-factory price were taxed at 18% instead of 1% and nothing else changed, the official prices on our car price list would move like this:

These are our estimates, not company prices: makers may absorb part of a tax change, and the final rule may treat models differently. Prices are each maker's published Pakistan price as listed on our price pages.

Should you book now?

If you were already planning to buy an EV in the next few months, a booking made and paid under the current rate is the only price you can count on; ask the dealer in writing whether a tax change before delivery is passed on to you. Price the monthly payment on our car loan calculator, and compare the running cost against petrol at today's petrol price with the fuel cost calculator. Registration costs are on the car registration tax calculator.

Hybrids are part of the same argument: the government had proposed 9% sales tax on hybrids in its auto policy draft, PakWheels reported in June. We will update this story when the government or the IMF publishes a decision.