Car and motorcycle prices likely to rise in 2026 – check details

ISLAMABAD: Prices of many vehicles and motorcycles in Pakistan may increase in 2026 due to a new demand from the International Monetary Fund (IMF).

According to reports, the IMF has asked Pakistan to end the sales tax exemption on locally made hybrid electric vehicles and motorcycles. The IMF wants the government to apply the standard 18% sales tax on these vehicles from the next fiscal year, 2026–27.

If the government accepts this proposal, prices of hybrid vehicles and motorcycles are likely to rise from July 2026, when the new budget rules take effect.

At present, locally manufactured hybrid electric vehicles enjoy tax exemptions under the Eighth Schedule of the Sales Tax Act. However, during talks with the Ministry of Industries and Production, the IMF suggested removing these vehicles from the exemption list and taxing them like regular vehicles.

Currently, hybrid vehicles with engine capacity below 1800cc are taxed at 8.5%, while those between 1801cc and 2500cc face a sales tax of 12.75%.

Earlier, the government had extended the tax relief on hybrid vehicles and motorcycles until June 30, 2026. But if the IMF’s recommendation is implemented, this relief will end in the next financial year, leading to higher prices for buyers.

Read More: Murree Police Unveil Strict Traffic Plan for New Year’s Night