Pakistan Likely to Remove Toll Tax for Electric and Hybrid Vehicles

The federal government is planning to remove toll tax for electric and hybrid vehicles on motorways and national highways across Pakistan. This proposal is expected to become part of the upcoming Auto Policy 2026–31, which aims to promote clean energy and modern transportation in the country.

New Energy Vehicles (NEVs) include Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs), and Fuel Cell Electric Vehicles (FCEVs). These vehicles are considered environmentally friendly because they produce lower emissions compared to traditional petrol and diesel vehicles. By offering toll tax relief, the government hopes more people will shift toward electric mobility in the coming years.

Pakistan Likely to Remove Toll Tax for Electric and Hybrid Vehicles

The move is being seen as an important step toward reducing fuel consumption and controlling pollution levels in major cities. Pakistan has been facing rising fuel import costs and increasing environmental concerns. Encouraging the use of electric vehicles can help lower the country’s dependence on imported fuel while supporting a cleaner environment.

Apart from toll tax exemptions, the government is also preparing major reforms in the automobile sector. According to reports, Additional Customs Duties (ACD) on vehicles will be completely removed by fiscal year 2029. Similarly, Regulatory Duties (RD) are expected to be reduced by 80 percent by 2030. These changes are designed to make the automobile market more competitive and attractive for investors.

The policy also plans to end Special Regulatory Orders (SROs) by 2030. For many years, these SROs played a major role in protecting local car manufacturers through special tariff benefits. However, the government now wants to gradually open the market and improve efficiency in the auto industry.

Import duties on Completely Built Unit (CBU) vehicles are also likely to decrease over the next five years. Currently, these duties range between 50 and 100 percent, but they may be reduced to 35 to 75 percent under the new policy. At the same time, tariffs on Completely Knocked Down (CKD) units, which are used for local vehicle assembly, are expected to decline from 30 percent to 20 percent.

See Also: PM Launches Electric Bike Scheme for Government Employees On Easy Installments

Officials believe these reforms will encourage local manufacturing while also attracting international companies to invest in Pakistan’s auto sector. The government is particularly focused on linking electric vehicle incentives with localization policies. This means companies receiving benefits for electric vehicles may also be required to increase local production and use locally manufactured parts.

The proposed policy reflects Pakistan’s growing interest in sustainable transportation and industrial development. If implemented successfully, the incentives could make electric and hybrid vehicles more affordable and attractive for consumers. This may also help the country move closer to global trends in clean energy and environmentally responsible transport systems.

Overall, the planned toll tax exemption for NEVs is being viewed as a positive initiative that could support economic growth, reduce environmental damage, and modernize Pakistan’s automobile industry in the years ahead.