Talks between Pakistan and the International Monetary Fund on the Auto Policy 2026 to 2031 were still open in the first days of October 2026. One reported point of friction is the sales tax on plug in hybrids and range extended electric vehicles. Accounts of the meetings say the Fund wants those vehicles on the standard 18 percent general sales tax, instead of the 1 percent rate written into the draft.
That is a proposal inside a review, not a new tax notification. No showroom has to reprice a plug in hybrid or a range extended model on these reports alone.
What the draft had offered
The paper under discussion is the Auto and Auto Parts Manufacturing Policy 2026 to 2031, prepared by the Ministry of Industries and Production. Accounts of the text say battery electric vehicles, plug in hybrids and range extended electric vehicles were to be treated together, with a 1 percent sales tax on the vehicles and on parts, plus relief from federal excise duty, capital value tax and withholding tax.
A wider account of the same review is in the note on how IMF objections have stalled the draft. The tax rate is one chapter. Cabinet approval has not followed, and other ideas in the paper, including export rules, are still proposals.
Where the reports do not use the same target
The reports agree that there is no finished deal. They do not agree on how wide the 18 percent push is.
One account, dated 3 October 2026, says sources described an IMF recommendation to lift plug in hybrids and range extended vehicles from the proposed 1 percent to the standard 18 percent. In that telling, the draft had grouped them with battery electric vehicles, and the Fund challenge was aimed at the plug in and range extended concession.
A second account from the same day says the Fund objected to a 1 percent sales tax on electric vehicles and their parts, called the concession discriminatory, and described electric vehicles as a luxury item that should not receive it. That version is broader than plug in and range extended models alone. The objection was tied to the fourth review talks, and the sources said the ministry would take the points to the Economic Coordination Committee and the federal cabinet before any rewrite.
A third account says the Fund argued for the standard 18 percent on electric vehicles and components, and that support, if the government still wants it, should come as a direct subsidy rather than a tax cut. It then says some reports extend an 18 percent rate to plug in hybrids and range extended vehicles as well.
A briefing described on 2 October is different again. It says Pakistani officials told the Fund that electric vehicles would pay 1 percent and that other hybrids would move to 18 percent. In that telling, the 18 percent line is part of a government briefing, not only an IMF demand, and the words other hybrids are not a clean split between plug in, range extended and battery electric cars.
Until the Fund or the ministry publishes the clause, the safe reading is narrow. People familiar with the talks say the 1 percent idea is under challenge. They do not establish one final rate, and they do not prove that the challenge stops at plug in and range extended models.
What a buyer would feel if 18 percent replaced 1 percent
The arithmetic is simple, and it is only arithmetic. On a taxable value of Rs 10 million, 1 percent is Rs 100,000 and 18 percent is Rs 1.8 million. The gap is Rs 1.7 million before any other tax, duty or dealer margin. Accounts of the talks have used that illustration. It is not the on road price of any named car, and it does not apply until a law or a notification changes the rate.
Range extended and plug in models already listed, including cars in the Deepal range, would be priced under whatever classification the final policy uses. A buyer looking at the Deepal S05 should not add Rs 1.7 million to today's card because of an unfinished argument. Read the live ex factory card and ask the dealer which tax is on the invoice now.
What is already law
A conventional hybrid is a separate case from this draft. From 13 September 2026, qualifying locally manufactured hybrids with engines up to 2,000 cc sit on an effective 18 percent sales tax framework after S.R.O. 1525(I)/2026. That rule is already in force. It is not the same decision as a reported IMF comment on plug in and range extended models.
Specified electric vehicle relief that is already written into tax law runs through 30 June 2027, and it depends on the category and on how the vehicle is built. A line that every electric car in Pakistan pays 1 percent today overstates the law. The explainer on what is law now and what is still a draft sets out that split.
Turning a draft rate into a showroom price still needs a government step, such as a fresh notification or a finance measure, and then a dealer invoice that uses it. The accounts say the next round is more consultation with assemblers, importers and the Fund. They do not say the cabinet has cleared a revised auto policy.
What not to do with the headline
Do not treat 18 percent as the tax on a plug in hybrid you book this week. Do not treat 1 percent as a promised discount either. Ask for the tax breakup on the quotation. Use the new car directory and compare cars if you are choosing between a petrol hybrid, a range extended model and a battery electric car. Anything that still burns petrol also depends on the petrol and diesel price, which moves on its own schedule.