Cabinet Grants Massive Tax Exemptions for Electric Vehicles

To encourage the promotion of four-wheeler electric vehicles (EVs) in Pakistan, the Federal Cabinet has granted massive tax exemptions and allows incentives. The cabinet has approved the summary forwarded by the Ministry of Industries. It allows one per cent sales tax for locally-made EVs up to 50 kwh and light commercial vehicles (LCVs) up to 150 kwh. The federal cabinet capped the duty on import of charging equipment at 1pc as well.

The EVs will be free from federal excise duty (FED) and the import of plant and machinery that uses in the manufacturing of these vehicles would be duty-free as well. Moreover, fed government has also removed additional customs duty (ACD) and accounting services and tax on EV imports.

Cabinet Grants Massive Tax Exemptions for Electric Vehicles

According to the policy, there will be only 1pc tax on import of EV parts for manufacturers. Apart from the tax facilities, the government has also given the relief in registration and annual renewal fee for EVs in Islamabad. Last week, the ECC approved the EV policy for four-wheelers during a meeting in Islamabad that was chaired by the Minister for Finance and Revenue Dr. Abdul Hafeez Sheikh.

Cabinet has today approved the Electric Vehicle policy for 4 wheelers.
Salient features:

– Removal of Addn Customs duty and AST on imports of EV cars.

– For Manufacturers: only 1% tax on import of EV parts.

– Registration & annual renewal fee waiver for EVs in ICT. 1/2

— Hammad Azhar (@Hammad_Azhar) December 22, 2020

The inherent complexities and long consultative process with existing original equipment manufacturers were two major factors that caused the delay in the finalization of four-wheeler policy.

EV technology is quite expensive than the traditional fuel vehicles but Governments throughout the world are trying hard to make this technology affordable.

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