ISLAMABAD
\nConsumers planning to buy solar panels, electric vehicles or hybrid cars may face higher costs in the upcoming Budget 2026-27, as the government reviews tax proposals amid ongoing negotiations with the International Monetary Fund (IMF).
\nSources say the IMF has refused to support new tax exemptions and is instead pushing for significant increases in General Sales Tax (GST) on electric vehicles, hybrid vehicles and solar energy equipment.
\nAccording to sources, the IMF has recommended raising GST on electric vehicles from 1% to 18%. The international lender has also proposed increasing the tax rate on hybrid vehicles from 8% to 18%.
\nIn addition, GST on solar panels could rise from 10% to 18%, a move that may significantly increase costs for consumers shifting toward renewable energy solutions.
\nIf the proposed tax changes are approved, prices of electric and hybrid vehicles are expected to increase substantially. The impact could extend across the entire electric mobility sector, including electric cars, motorcycles, rickshaws, trucks and buses.
\nSources also indicate that electric pickups, tractors and double-cabin vehicles may face additional taxation under the new budget proposals.
\nIndustry observers fear that higher taxes could slow the adoption of electric vehicles and alternative energy technologies in Pakistan.
\nThe proposed tax measures have emerged even before the government formally unveils its new auto policy.
\nAccording to sources, the government had planned to encourage electric vehicle adoption by gradually reducing the average tariff on the auto sector from 10.6% to 6% over the next five years.
\nOfficials were also considering abolishing the 1% advance tax on exports in the upcoming budget.
\nHowever, the IMF\u2019s demand for an 18% GST on vehicles has complicated those plans and created uncertainty around incentives for the auto sector.
\nWork on multiple tax proposals for Budget 2026-27 is currently underway as policymakers attempt to balance revenue targets with economic growth objectives.
\nThe IMF\u2019s stance against tax exemptions has made budget discussions more challenging, particularly in sectors seeking incentives and relief measures.
\nAs a result, concerns are growing that the new budget could lead to higher prices for solar panels, electric vehicles and hybrid automobiles.
\nWhile discussions continue over taxes, Pakistan\u2019s textile industry has renewed demands for immediate financial relief. The sector has asked the government to release pending refunds worth Rs327 billion without delay.
\nTextile exporters have also demanded lower tax rates and reductions in electricity and gas tariffs, arguing that rising production costs are making it increasingly difficult to compete in international markets.
\nIndustry representatives say that without meaningful reductions in energy and taxation costs, maintaining export competitiveness will become increasingly challenging.
\nSources indicate that some of the proposed measures could provide exporters with relief of up to Rs100 billion.
\nHowever, officials familiar with the budget process say the chances of a major relief package for the export sector currently remain limited.
\nWith Budget 2026-27 preparations entering a crucial phase, businesses, consumers and investors are closely monitoring the government\u2019s final decisions.<\/p>\n","protected":false},"excerpt":{"rendered":"
ISLAMABAD Consumers planning to buy solar panels, electric vehicles or hybrid cars may face higher costs in the upcoming Budget 2026-27, as the government reviews tax proposals amid ongoing negotiations with the International Monetary Fund (IMF). Sources say the IMF has refused to support new tax exemptions and is instead pushing for significant increases in […]<\/p>\n","protected":false},"author":2,"featured_media":548798,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-548782","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n