Budget 2025-26 Explained: Why Hybrid Car GST Remains Unchanged in Pakistan

Wondering what the effect of the Budget 2025-26 is on the cost of a hybrid car in Pakistan? Wise Wheels Pakistan presents this comprehensive explanation on why the GST on hybrid cars will continue being the same this year.

Several days back the Finance Minister Muhammad Aurangzeb was in the National Assembly to reveal the 2025-26 budget. Be as it may, it came as expected full of its mixture of new taxes, changes in duties, and policy shifts with the automotive industry once again in the limelight. 

During this year though, imported and local cars have taken up most of the limelight with one of the outstanding suggestions being the introduction of a Green Tax on the petrol and diesel cars. At the same time, there was the rumbling of changes regarding the General Sales Tax (GST).

But this is when the story took a different twist.

In his speech, the Finance Minister was very assuring of the fact that the GST on hybrid electric vehicles (HEVs) would be increased to an overwhelming 18%, now 8.5%. However, the official Finance Bill 2025 that was released later on was anomalously silent to include this proposed amount increment to hybrids.

What does it imply? Did the Minister fault during the speech? Or could it be that the government only wants to know how the people are responding after which they will make their decision? Now, it is time to enter the specifics.

What is in the finance bill 2025?

When Finance Bill 2025 was sent out, it did not mention the GST increase on hybrids. Isn t it surprising? Indeed. The lack of GST increase on HEVs in this bill led to much confusion, as one must know that the Finance Bill will have several times more legal weight than a speech. This made us do some research.

What did we find out?

As we went through the mushrooming details of Finance Bill 2025-26 in combination with the Sales Tax Act of 1990 then, a few important points were brought out:

• Cl. 72 that imposed a 12.5 % GST on the locally assembled car with engine capacity below 850cc has been withdrawn. The elimination of this clause will make such vehicles be charged the general rate of GST of 18%.
• On the contrary, however, Clause 73 (which deals specifically with the hybrid cars) will survive. As stipulated by it:
• The hybrids with a capacity of less than 1800cc still remain under a reduction rate at 8.5 percent GST.
• Hybrids between 1801cc to 2500cc are charged with tax 12.75 GST. This provision will be in operation till June 30, 2026.

Overall: Hybrid cars do not attract any increase in GST in Budget 2025-26 contrary to what was stated during the budget statement.

Insider information relating to the government suggests that in the next year, perhaps in the release of the operational budget in 2026-27, there could be a discussion of the government including the increase of the GST on hybrids. 

Therefore, although the existing customers of HEVs can rest assured, there is still a chance of a tax increase that might take place after June 2026. When you are considering buying a hybrid vehicle, then perhaps it can be wise to buy them as soon as you can.

Wise Wheels Pk always makes sure to keep you in touch and keep up to date with everything that is happening in the world of automobiles.