For years, car buyers in Pakistan were only asking one question: How many CCs? That’s the power of it, the status of it, and the tax you had to pay. However, the new Auto Industry Development and Export Policy 2026-31 is altering the status quo. There is a reason why the government can push electric cars (EVs) and ensure more are paying taxes. A change is coming for future car buyers.
A clear overview of the new tax rates
The new policy will have different sales tax rates for various types of cars. Look at the table below to see.
| Vehicle Type | Proposed Sales Tax |
| Petrol or Diesel Car | 18% |
| Self-Charging Hybrid | 9% |
| Electric Car or Plug-in Hybrid | 1% |
| Small Electric City Car (L6/L7) | 1% |
The government is trying to encourage you to purchase electric vehicles. Low city tax will also apply to small electric cars. They should not cost more than 1.5 to 2.5 million rupees. Also, they are cheap enough that many bike riders could upgrade to electric cars.
Non-Filers May Not Be Allowed to Buy Cars at All
If you don’t file your taxes, you can still purchase a car right now. You simply end up paying significantly more taxes. However, all that is about to change.
The new policy could make it impossible to buy any car for non-filers. Not just new cars but used cars, too. From July 1 2026, the IMF is demanding that Pakistan do this.
Should this ban come into effect, only companies and taxpayers will be permitted to purchase vehicles. Those who are not taxpayers won’t be able to purchase anything.
If you’re considering purchasing a vehicle, be certain your tax information is updated. If not, you might not be able to purchase one regardless of funds.
Small Electric Cars Are Coming
The Suzuki Alto now costs nearly 3 million rupees. For many families, it’s just too pricey. The government is encouraging a new class: L6, L7, electric vehicles.
Small electric cars are good for city roads. Moreover, they are low-maintenance cars. With only 1% sales tax, they will cost between 1.5 and 2.5 million rupees.
This may be a first shot at a real opportunity to upgrade a motorcycle to a car without sacrificing much of the price tag.
An Electric Luxury SUV is coming to Pakistan: AVATR 11
Changan is delivering a new luxurious electric SUV to Pakistan. It is referred to as the AVATR 11. This is not a cheap city car. The vehicle was developed with Huawei and CATL, China’s biggest battery manufacturer.
The AVATR 11 has a 116.79 kWh battery. It can take between 570 and 680 kilometres on a charge. This is sufficient to run from Lahore to Islamabad and back.
It also comes with quick charging. A supercharger gives you a range boost of 200km in 10 minutes.
The interior is exceedingly luxurious. Nappa leather. A suede roof. Three large screens. Meridian 25-Speaker sound system. This car was designed by the designer of BMW’s 6 and 7 Series.
There are 308 horsepower available in a rear-wheel-drive version. Its texture and strength are good. The official price is not out yet, but experts believe that its price ranges between 13 million and 15 million.
The car will face off with luxury German EVs, as well as the Zeekr 7X. It proves that the EV market has emerged beyond rickshaws and cheap bikes in Pakistan.
The Implications of this to Future Buyers
If you are interested in buying a vehicle in the next few months, here’s what to do.
First, make sure you have a tax status. If you are not a filer, you should become one. Soon, you might not be able to buy any cars at all ever again.
Second, consider electric vehicles (EVs) instead. The amount of the tax difference is enormous. 1% versus 18%. It helps that an EV is much cheaper than a petrol car.
Thirdly, see small electric city cars. They might be the most affordable option for those who simply need to get around the city.
Fourth, luxury is coming too, in this case through the AVATR 11, and other high-end EVs. There will be greater options than you can find before.
Conclusion
The auto policy is evolving in Pakistan. The days of the annoying question “how much CC is it” are over. The government only has two concerns: making people switch to EVs and pay tax.
The rules have not been finalized. But it’s clear the direction is going. You may no longer be able to own a car in the coming years. You will end up paying far more taxes if you purchase a petrol car. Go for electric cars, and you’ll receive massive tax breaks.
Be consistently ready to file your taxes. And begin to consider electric alternatives. The next few months will change how Pakistan buys cars.
