The short version: Prime Minister Shehbaz Sharif has approved the draft Auto Policy 2026–31 in principle, according to reported policy details from 20 October 2026. The draft would add an Auto Development Levy of 2% on petrol and diesel cars from 1,001cc to 2,000cc and 10% above 2,000cc, and cut sales tax on qualifying electric, range-extender and plug-in hybrid cars. Nothing has changed at the showroom yet. The draft still needs federal cabinet approval and IMF clearance, and no SRO, notification or effective date has been issued. If the reported rates became law, a Corolla 1.6 M/T could rise by about Rs 122,000 and a Fortuner 2.7 G by about Rs 1.24 million (draft estimates).
Below we separate what government documents actually say from what has only been reported. We then work through draft estimates on cars you can buy today, using current prices from Autowheels model pages and official maker sites, checked on 21 October 2026.
Where the policy stands on 21 October 2026
| Step | Status |
|---|---|
| Draft prepared by the Ministry of Industries and Production | Done. The ministry has publicly referred to it as the Auto and Auto Parts Manufacturing Policy 2026–31 |
| Approval in principle by the Prime Minister | Reported on 20 October 2026. We found no Ministry of Industries, EDB or FBR press release on it as of 21 October |
| IMF clearance | Pending, according to reported policy details |
| Federal cabinet approval | Pending |
| Levy enacted in law | No. Any new levy would need legislation, such as a Finance Act or a separate Act of Parliament |
| FBR sales-tax notification for NEVs | Not issued |
| Effective date | None announced |
The current framework, the Automotive Industry Development and Export Policy 2021–26, expired on 30 June 2026. Our earlier reports cover the IMF's review of the draft, PAMA's request to see the text and the export rules that could reopen WTO tensions.
What official government documents say
- The aim of the policy. In its Ministry of Industries and Production statement of 3 October 2026, the Ministry of Industries and Production quoted Adviser Haroon Akhtar Khan as saying the Auto and Auto Parts Manufacturing Policy 2026–31 "aimed to make Pakistan's automotive industry more competitive, resilient and integrated with global value chains". He also said the electric vehicle shift should not become "merely an electric vehicle import revolution", and that Pakistan needs its own capability in "batteries, motors, charging equipment, power electronics, automotive software and energy storage".
- A levy on petrol and diesel cars was already official policy, at lower rates. The government's New Energy Vehicles Policy 2025–30 says that, to fund EV incentives and charging infrastructure, "a levy on the first sale and import internal combustion engine vehicles will be imposed through an Act of Parliament". It says this would cover "both new and old imported" ICE vehicles. As an example, it uses 1% below 1,300cc and on public service vehicles, 2% for 1,300–1,800cc and 3% above 1,800cc. It estimates this would raise about Rs 122 billion over the policy period.
- The 30% target. The NEV Policy targets new energy vehicles at 30% of new vehicle sales by 2030.
- Which cars count as NEVs. The NEV Policy includes battery electric cars, plug-in hybrids, range-extender EVs and fuel-cell cars. For four-wheelers, a plug-in hybrid qualifies only if it can do at least 50 km on electricity alone on one charge.
- Tariffs. The NEV Policy says special auto duty regimes, including those under the Fifth Schedule to the Customs Act, will be gradually phased out by 2030, in line with the National Tariff Policy 2025–30.
You can read the policy documents on EDB's electric vehicle incentives page and the ministry's website.
Reported policy details of the 2026–31 draft
The figures below come from reported policy details of the draft approved by the Prime Minister. They do not appear in any notification from the Ministry of Industries, EDB or FBR yet, and they could change before the cabinet and the IMF sign off.
| Measure | Reported draft detail |
|---|---|
| Auto Development Levy, 1,001–2,000cc | 2% on petrol and diesel vehicles, local and imported |
| Auto Development Levy, above 2,000cc | 10% |
| Exempt from the levy | Cars up to 1,000cc, two- and three-wheelers and tractors |
| Sales tax on battery electric cars (BEV) | 1% |
| Sales tax on range-extender EVs (REEV) | 6% |
| Sales tax on plug-in hybrids (PHEV) | 9% |
| Who qualifies for the lower rates | Cars that charge from an external source and have at least 50 km of electric range |
| Other NEV relief | Exemption from FED, CVT and withholding tax, except for NEVs valued above $75,000 |
| Imported (CBU) EVs up to $15,000 | Customs duty of 5% in FY27–FY28, 25% in FY29–FY30, then 15% |
| Export targets | $6 billion of vehicles and $1.2 billion of parts |
| Levy revenue | More than Rs 232 billion |
The draft goes further than the NEV Policy. The official NEV Policy example uses 2% for 1,300–1,800cc and 3% above 1,800cc. The reported draft uses 2% across 1,001–2,000cc and 10% above 2,000cc. For a buyer, this means mid-size sedans and small SUVs would face about the same levy as the NEV Policy proposed. Big SUVs and large-engine cars would face more than three times as much.
Draft estimate: how the levy would hit petrol and diesel cars
Assumptions. We apply the reported levy rate to today's listed price for each variant. The final law could instead charge it on the ex-factory value before tax, which would make the increase a little smaller. We also assume the carmaker passes the full levy on to the buyer. These are draft estimates, not quotes. The last column shows the levy under the rates in the official NEV Policy 2025–30, for comparison.
| Model and variant | Engine | Price today | Reported levy | Levy (draft estimate) | Price with levy (draft estimate) | Under NEV Policy example rates |
|---|---|---|---|---|---|---|
| Toyota Corolla 1.6 M/T | 1,598cc | Rs 6,099,000 | 2% | Rs 121,980 | Rs 6,220,980 | Rs 121,980 (2%) |
| Toyota Corolla 1.6 A/T | 1,598cc | Rs 6,699,000 | 2% | Rs 133,980 | Rs 6,832,980 | Rs 133,980 (2%) |
| Toyota Corolla Altis CVTi 1.8 | 1,798cc | Rs 7,029,000 | 2% | Rs 140,580 | Rs 7,169,580 | Rs 140,580 (2%) |
| Toyota Corolla 1.6 SE | 1,598cc | Rs 7,339,000 | 2% | Rs 146,780 | Rs 7,485,780 | Rs 146,780 (2%) |
| Toyota Corolla Altis Grande 1.8 (Black) | 1,798cc | Rs 7,709,000 | 2% | Rs 154,180 | Rs 7,863,180 | Rs 154,180 (2%) |
| Toyota Fortuner 2.7 G | 2,694cc | Rs 12,435,000 | 10% | Rs 1,243,500 | Rs 13,678,500 | Rs 373,050 (3%) |
| Toyota Fortuner 2.7 V | 2,694cc | Rs 14,935,000 | 10% | Rs 1,493,500 | Rs 16,428,500 | Rs 448,050 (3%) |
| Toyota Fortuner Legender 2.8 diesel | 2,755cc | Rs 19,569,000 | 10% | Rs 1,956,900 | Rs 21,525,900 | Rs 587,070 (3%) |
Corolla prices are from Toyota Indus and the Autowheels Toyota Corolla page, and Fortuner prices are from the Toyota Fortuner page. The Corolla falls in the 2% band whether you buy the 1.6 or the 1.8. For more on the Corolla line-up, see our Corolla facelift price guide and Altis facelift report.
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Toyota Corolla: front
What about pickups? The reported draft ties the 2% band to PCT heading 87.03, which covers passenger cars. Pickups such as the Toyota Hilux Revo are normally classified as goods vehicles, under a different heading. The reported details don't make clear whether the 10% rate would cover them. If it did, a Revo G M/T at Rs 12,329,000 would rise by about Rs 1,232,900 to around Rs 13,561,900 (draft estimate). Our pickup price guide has the full Revo, D-Max and T9 line-up.
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Toyota Fortuner: front
Draft estimate: what lower NEV sales tax could mean
This part is harder, because the sales tax built into each car's price today depends on how it is classified. It also depends on whether it is locally assembled or imported, and on the battery size. Our explainer on what is law now and what is still draft covers the rules in force now. So the table shows one clear scenario. If today's price includes 18% standard sales tax, and the reported draft rate replaced it, the price would fall by roughly this much. We back the tax out of the listed price and ignore other duties, so treat each result as a draft estimate.
| Model | Type | Price today | Reported draft rate | Change vs 18% (draft estimate) | Price at draft rate (draft estimate) |
|---|---|---|---|---|---|
| Chery Tiggo 7 PHEV | PHEV | Rs 9,499,000 | 9% | Rs 724,500 lower | Rs 8,774,500 |
| XPeng L03 REEV | REEV | Rs 11,500,000 | 6% | Rs 1,169,492 lower | Rs 10,330,508 |
| Chery Q EV | BEV | Rs 5,554,000 | 1% | Rs 800,153 lower | Rs 4,753,847 |
- Chery Tiggo 7 PHEV (Rs 9,499,000 on Chery Pakistan's site and Autowheels): it claims 90+ km of electric range, well above the 50 km rule, so it would qualify as a PHEV. If its price includes 18% today, a 9% rate would take off about Rs 724,500 (draft estimate). See our Tiggo 7 price-lock report.
- XPeng L03 REEV (Rs 11.5 million ex-factory in our launch coverage; XPeng Pakistan's own site does not yet show a written price): electric range claims run from 210 km to 250 km, depending on the test cycle. That clears the 50 km rule. At a 6% REEV rate instead of 18%, the saving would be about Rs 1,169,492 (draft estimate). Compare it with the Deepal S05 in our L03 vs S05 guide.
- Chery Q EV (Rs 5,554,000 on Chery Pakistan's Chery Q page, which describes it as "New Price and Tax Locked"): this is a battery electric car with a 42.7 kWh pack. If it already pays a concessional rate under the EV relief extended to 30 June 2027, a 1% draft rate would change little or nothing. Only in the 18% scenario would the price fall by about Rs 800,153. Read our Chery Q vs MG Binguo EV comparison.
The IMF has pushed back on lower sales tax for plug-in and range-extender cars in earlier rounds of talks. That is why these three examples are the least certain part of the draft. For the background, see our reports on the IMF's 18% GST request for PHEVs and REEVs and EV tax and booking rules.
Who would gain and who would pay more
| Buyer | Likely effect if the reported draft became law |
|---|---|
| Small car buyers (up to 1,000cc) | No levy under the reported exemption. See cars under Rs 70 lacs and the hatchback list |
| Sedan and compact SUV buyers (1,001–2,000cc) | About 2% more, e.g. about Rs 120,000–155,000 on a Corolla (draft estimate) |
| Large SUV and big-engine buyers (above 2,000cc) | About 10% more, e.g. about Rs 1.24–1.96 million on a Fortuner (draft estimate) |
| Conventional hybrid buyers | The reported NEV rates are for cars that plug in. A self-charging hybrid would still be treated as an ICE car for the levy, unless the final text says otherwise. See our hybrid price guide |
| PHEV, REEV and EV buyers | Possibly lower sales tax plus FED, CVT and WHT relief, if the IMF agrees |
| Used import buyers | The NEV Policy says its levy would cover "both new and old imported" ICE vehicles. Watch the final text. See our used import rules report |
Should you buy now or wait
- Petrol or diesel car over 2,000cc: if you had already planned to buy, buying before any levy is enacted avoids the reported 10%. Ask the dealer whether your booking price is locked if a levy is added before delivery, and get the answer in writing.
- 1,001–2,000cc car: 2% is small enough that a dealer discount or a price change from the carmaker could matter more. Don't rush.
- Plug-in hybrid, REEV or EV: the draft could make these cheaper, but the IMF may block the lower rates. If a carmaker offers a written "tax lock", as Chery does on the Tiggo 7 and Chery Q, read exactly what it covers.
- Everyone: invoices follow the Finance Act and FBR notifications, not news about a draft policy. Track the EV range on the Chery page, the SUV list and with our comparison tool.
Bottom line
The Prime Minister's in-principle approval is a real step, but it is not law. Under the reported draft, petrol and diesel cars from 1,001cc to 2,000cc would pay a 2% levy and bigger cars 10%. Qualifying plug-in, range-extender and battery electric cars would pay much lower sales tax. Until the cabinet approves the policy, the IMF agrees and Parliament or the FBR puts the rates into law, every figure here remains a draft estimate. We will update this page when an official notification is issued. For the market backdrop, see September 2026 car sales and the rising car import bill.