The federal government has stepped back from its earlier plan to raise the sales tax on hybrid cars with engine sizes up to 1800cc.
This proposed hike, from 12.5 percent to 18 percent, was expected to bring in Rs. 7 billion in extra revenue.
However, after review by the National Assembly Standing Committee on Finance, the increase has been scrapped, and the current 12.5 percent rate will continue.
This is the second time within a year that such a tax increase on hybrid vehicles has been dropped before final budget approval. As per the existing automobile policy, the sales tax on hybrid cars cannot be raised until June 2026.
On the other hand, the government is still moving forward with its plan to raise the sales tax on small cars (up to 850cc) from 12.5 percent to 18 percent.