IMF Nixes Pakistan’s 1% EV Sales Tax Plan, Throwing Auto Policy into Disarray

The International Monetary Fund (IMF) has thrown a spanner in the works for Pakistan’s automotive future by rejecting the government’s proposal to introduce a 1% sales tax on electric vehicles (EVs). This decision has stirred up a wave of uncertainty surrounding the upcoming Auto Policy for 2026-31.

Initially, the government aimed to promote greener alternatives by suggesting a favorable 1% tax rate for new energy vehicles. On top of that, they also floated the idea of a 9% sales tax for hybrid cars. However, with the IMF’s recent stance, it seems the road to a sustainable automotive market in Pakistan just hit a major pothole.

This rejection not only complicates the planning for the Auto Policy 2026-31 but also raises questions about how the government will proceed in promoting electric mobility in the country. As the situation unfolds, many will be keen to see how the automotive landscape adapts to these challenges.