KARACHI: Ministry of Industries and Production requested Finance Ministry and FBR to revert sales tax on hybrid electric vehicles to 8.5 percent as defined in Para 3.7(iv) of AIDEP instead of 25 percent as imposed in recent Finance Bill.

Latest increase in Sales Tax on hybrid electric vehicles as per Finance Bill 2024-25 has jeopardised Auto Industry Development and Export Policy (AIDEP) 2021-26 of government by raising Sales Tax from 8.5 percent to 25 percent contradicting commitment made under Para 3.7(iv) of AIDEP. According to Ministry of Industries and Production AIDEP 2021-26 was approved by Cabinet and effective from FY 2021 onwards, was designed to promote new, fuel-efficient and environment friendly technologies. Sales Tax was set on electrical vehicles below 50 KWH battery at 1 percent and on hybrid electric vehicles at 8.5 percent which was 50 percent of prevailing rate. This policy aimed to ensure faster adoption of these technologies, sources said. Several renowned auto manufacturers including Toyota, Hyundai and Sazgar Engineering Works (Haval), have already invested in manufacturing of hybrid electric vehicles based on this policy.