ISLAMABAD – Pakistani auto industry is making comeback but consumers who are considering hybrid vehicle will face blow, with four wheelers expecting to climb higher.

With fully electric vehicles (EVs) and qualifying PHEVs remaining untaxed, they could become more attractive options for eco-conscious and cost-sensitive buyers. In major development under federal budget 2025, Pakistani government expanded scope of its newly introduced Green Tax a move that is set to increase the prices of several hybrid vehicles across the country.

The only exemption remains for Plug-in Hybrid Electric Vehicles (PHEVs) with a minimum 50km electric-only range, and fully electric vehicles (EVs).

Green Tax

Green Tax is being introduced for first time this year, and is aimed at curbing emissions by charging a percentage-based levy on gasoline and diesel vehicles. The revenue generated will go toward environmental protection projects. The tax applies at the time of vehicle purchase as follows 1pc for engine sizes up to 13000cc, 2pc for cars up to 1800cc and three percent for engines above 1800cc.

Government defends the move, stating that although hybrids are more efficient than traditional gasoline vehicles, they still rely on combustion engines and emit pollutants. As such, they should also contribute to environmental clean-up efforts through the Green Tax.

Punjab raises Annual Vehicle Token Tax Based on Invoice Value; Check new rates