The 2021-22 budget has been a bearer of good news for the automotive industry, analysts, enthusiasts, and casual car buyers alike, thanks to significant relief in duties and taxes on the sales and purchases of smaller vehicles.

More importantly, the current budget has made it evident that the government’s primary focus is on encouraging the buying, selling, and manufacturing of more environmentally friendly vehicles in the near future.

Besides the tax relief for the sale and purchase of vehicles with engine displacements of up to 850cc, the Federal Minister for Finance, Shaukat Tarin, announced that the government has offered relief in terms of taxes on the imports of the CKD units of Electric Vehicles (EVs).

He added that the sales tax on locally assembled EVs has been reduced from 17 percent to one percent. Furthermore, the Value Added Tax on the imports of EVs and their CKD kits and the Federal Excise Duty (FED) on four-wheeled EVs have been abolished.

Will The Relief Boost Demand?
Minister Tarin declared that the government wants to encourage the buying and selling of environmentally friendly vehicles in Pakistan through these measures.

It bears mentioning that the public is still uncertain about the normalization of EVs in Pakistan because of the lack of charging infrastructure, the inherently high costs of manufacturing that lead to high prices, and maintenance-related issues.

The success of EVs in Pakistan can only be ensured if the government enacts a policy to aid the speedy development of the charging infrastructure, and take measures to ensure low manufacturing costs for EVs to ensure affordable prices.