The government has decided to abolish the registration fee and motor vehicle tax on Electric Vehicles (EVs) following the cabinet’s decision to incentivize those who opt to buy them.
This exemption has only been approved for the two-wheeled and three-wheeled EVs and Heavy Commercial EVs, and is now effective. The incentives for the owners of four-wheeled EVs will be highlighted in the upcoming auto and EV policy.
The government has provided the following incentives to the EV segment in the 2021-22 financial budget.
Reduction of the General Sales Tax (GST) rate on locally assembled EVs from 17 percent to one percent in a bid to promote environmentally-friendly vehicles. This is only applicable to passenger vehicles with a battery pack of up to 50 kW and light commercial vehicles with a battery pack of up to 15o kW.
The Federal Excise Duty (FED) has never been applicable to EVs, and will remain the same in the current budget.
Value Added Tax (VAT) on the import of Completely Knocked Down (CKD) kits for EVs has been abolished.
Only one percent tax will be incurred on the import of EV parts for manufacturers.
The duty on the imports of charging equipment will be one percent.
The GST on locally assembled and imported hybrid vehicles will be:
8.5 percent for vehicles up to 1800cc
12.75 percent on vehicles between 1801cc and 2500cc
The aforementioned concessions will remain valid until 30 June 2025 for Completely Built-Up (CBU) units of two-wheeled and three-wheeled EVs and heavy commercial EVs.
The concessions will remain available until 30 June 2026 for locally assembled 4-wheeled EVs with a battery pack of up to 50 kW and locally assembled commercial vehicles with a battery pack of up to 150 kW.