ISLAMABAD: Pakistan electric vehicle industry just bought itself another year of breathing room. Wealthy buyers eyeing high-end electric cars and SUVs did not get off so easy.

FBR has pushed the sales tax exemption on CKD (completely knocked-down) kits for specified electric vehicles out to June 30, 2027. The relief was due to lapse in June 2026, a deadline that had assemblers watching the calendar nervously. Field formations across the country received the fresh budget instructions on Friday, ordering them to apply the extension under S. No. 157 of Table-1 of the Sixth Schedule to the Sales Tax Act.

FBR also stretched the 1% reduced sales tax rate on specified EVs to the same 2027 deadline, giving assemblers and importers a full extra year to plan production runs, price cars competitively, and chase the government's clean-mobility targets without a looming tax cliff. Electric trucks in CBU (completely built-up) condition and electric buses now qualify for the reduced rate too, a move that widens the relief beyond passenger cars into commercial and public transport fleets for the first time.

Pakistan EV Industry Gets Tax Relief

But here's the twist that changes the whole story: FBR simultaneously armed itself with a brand-new weapon against luxury EVs.

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Under Section 55 and 5511 of the Federal Excise Act, 2005, imported and locally manufactured vehicles normally face federal excise duty of up to 40%. Electric vehicles had dodged that duty entirely until June 30, 2026. FBR extended that exclusion by a year as well but carved out a steep exception for premium electric cars.

Buyers importing an EV priced between $75,000 and $110,000 will now pay 30% federal excise duty. Anyone bringing in an electric vehicle worth more than $110,000 faces a 40% duty, the same top rate long reserved for conventional luxury vehicles. Pakistan's tax authority, in effect, just told wealthy EV buyers that going electric no longer buys them a free pass on luxury taxation.

The dual move tells a sharper story than a simple "extension" headline suggests. FBR wants qualifying EVs to remain more price-competitive well into 2027. At the same time, it wants six-figure imported electric SUVs and sedans, often bought by Pakistan's wealthiest households, to contribute meaningfully to the tax base.

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A six-figure luxury EV crossing the $110,000 mark now faces nearly the same federal excise duty as a petrol-powered luxury vehicle would.

Local EV Assemblers Get Relief

For assemblers building budget and mid-range electric vehicles, though, the message is reassuring: the reduced 1% sales tax regime isn't going anywhere for another year, and the CKD kit exemption removes a major cost pressure from local assembly lines. Electric bus and truck operators, key to Pakistan's public transport electrification push, get the same runway.

FBR's instructions arrive as part of the broader 2026-27 budget rollout, signalling that Islamabad still sees EV adoption as a policy priority just not one that should shield the ultra-luxury segment from its fair share of federal excise duty. The next twelve months will show whether this split-track approach actually accelerates mass EV adoption while reining in luxury imports, or whether it simply pushes premium buyers to look elsewhere.