Pakistan's federal government is considering a carbon levy of 10 to 19.5 percent on vehicles over 2000cc as part of the upcoming budget. The goal is to discourage fuel-heavy transport and push consumers toward electric vehicles. At the same time, officials are designing incentives for locally manufactured EVs, including reducing customs duty on EV batteries and components to as low as 1 percent and keeping sales tax at 1 percent. The policy may also exempt EVs from federal excise duty, capital value tax, and withholding tax to lower upfront costs. The proposal is being reviewed by a high-level committee chaired by Deputy Prime Minister Ishaq Dar. The carbon levy on large vehicles could generate over Rs. 142 crore within five years. Hybrid vehicles may not receive similar tax breaks, signaling a shift toward full electric mobility. The policy aims to attract investors and consumers to the domestic EV market while supporting environmental goals.
