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In its newly proposed 2025–26 federal budget, the government has announced a major tax overhaul affecting the automotive sector—most notably, a sharp increase in the General Sales Tax (GST) on hybrid vehicles. The GST on these vehicles is set to rise from the current 8.5% to a uniform 18%, aligning it with the rate applied to petrol and diesel-powered vehicles.

Uniform GST Policy for All Powertrains

This policy shift eliminates the previously reduced GST rate for hybrid vehicles, which had been implemented to encourage cleaner and more fuel-efficient transportation options. Under the new framework, all vehicles—regardless of whether they are powered by petrol, diesel, or hybrid systems—will be subject to the same flat GST rate of 18%.

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Impact on Hybrid Car Prices

With the GST nearly doubling for hybrid vehicles, several popular models are expected to see substantial price hikes. According to data from PakWheels, here are the projected increases:

Model Current Price New Price (18% GST) Increase
Haval H6 HEV 1.5L ₨11,749,000 ₨12,777,714 ₨1,028,714
Haval Jolion 1.5L ₨9,295,000 ₨10,108,848 ₨813,848
Toyota Corolla Cross 1.8 HEV ₨8,999,000 ₨9,786,931 ₨787,931
Toyota Corolla Cross 1.8 HEV X ₨9,449,000 ₨10,276,332 ₨827,332
Hyundai Elantra Hybrid 1.6L ₨9,700,000 ₨10,549,309 ₨849,309
Hyundai Tucson Hybrid Smart 1.6L ₨10,999,000 ₨11,962,046 ₨963,046
Hyundai Tucson Hybrid Signature 1.6L ₨11,999,000 ₨13,049,604 ₨1,050,604
Hyundai Santa Fe Smart 1.6L ₨12,490,000 ₨13,583,594 ₨1,093,594
Hyundai 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
Kia Sorento 1.6T HEV FWD ₨14,699,000 ₨15,986,009 ₨1,287,009
Kia Sorento 1.6T HEV AWD ₨15,999,000 ₨17,399,834 ₨1,400,834
MG HS PHEV 1.5L ₨9,699,000 ₨10,548,221 ₨849,221

Industry Reactions

The proposed GST hike has sparked serious concerns among auto industry stakeholders. Manufacturers, dealers, and consumers fear that the move will make hybrid cars—once considered a bridge to a greener future—financially out of reach for many buyers. Experts argue this may undermine efforts to promote sustainable transportation and curb emissions in Pakistan.

As the government pushes for higher tax revenues, the decision to eliminate hybrid incentives could significantly hinder the country’s progress toward cleaner mobility solutions.