Pakistan’s 2025-26 Budget Proposes Sharp GST Hike on Hybrid Vehicles, Prices Set to Rise Substantially

Islamabad:In its proposed **2025-26 federal budget**, the Government of Pakistan has introduced sweeping tax reforms that include a significant **increase in General Sales Tax (GST) on hybrid vehicles**. The current **8.5% GST rate** on hybrid cars is set to jump to a **flat 18%**, aligning it with the rate applied to petrol and diesel vehicles.

Previously, the lower GST rate was part of a **policy incentive to promote cleaner mobility**, making hybrids a more affordable and environmentally friendly option. However, under the new policy, nearly all hybrid models—**except for two lower-end variants**—are expected to see a **price hike of approximately PKR 1 million**, according to estimates compiled by auto platform **PakWheels**.

### Affected Models:

Popular hybrid cars in the local market from manufacturers like Toyota, Honda, and others will be directly impacted. Industry sources report that vehicles such as the **Toyota Prius**, **Honda Vezel**, and **Toyota Corolla Cross Hybrid** could experience substantial price increases due to the proposed GST change.

### Industry Concerns:

The announcement has raised alarms among both **automobile manufacturers and potential buyers**. Hybrid vehicles are known for their **fuel efficiency and lower emissions**, and the increased tax burden may **dampen demand** in a market already struggling with affordability issues.

**Auto industry experts** warn that this move could **undermine the government’s green mobility goals** by discouraging consumers from adopting fuel-efficient and environmentally conscious vehicle options.

A senior industry analyst noted:
*“This policy shift not only hurts buyers but also contradicts Pakistan’s broader climate commitments. A rollback of clean mobility incentives sends the wrong signal to both investors and the public.”*

### Broader Implications:

With the proposed 18% GST to be applied uniformly to **all vehicle types—petrol, diesel, and hybrid**—the cost of vehicle ownership in Pakistan is poised to rise across the board. For a country seeking to reduce its carbon footprint, the decision has prompted debates over **balancing revenue generation with sustainable development goals**.

The final decision on the GST hike is expected to be debated in parliament during the budget approval process later this month. Until then, **automakers, dealerships, and environmental advocates** are likely to lobby the government for reconsideration or at least **tiered tax treatment** for eco-friendly vehicles.