Govt proposes NEV levy on ICE vehicles in budget FY26

June 11, 2025 (MLN): In a move to reshape the automotive landscape, the federal government has unveiled a proposal under the Budget 2025–26 introducing a New Energy Vehicle (NEV) Adoption Levy.

This levy targets internal combustion engine (ICE) vehicles, including both locally assembled and imported units.

Finance Minister Muhammad Aurangzeb confirmed the measure during the budget presentation, noting that the new levy is designed to generate revenue while gradually steering the market toward more eco-friendly alternatives.

Under the newly proposed NEV Adoption Levy, internal combustion engine (ICE) vehicles will be taxed based on engine capacity and type.

For smaller vehicles with engines under 1300cc, a 1% levy on the vehicle’s value will apply to both locally assembled and imported cars.

Mid-range vehicles with engine capacities between 1300cc and 1800cc will be subject to a 2% levy, while those with engines over 1800cc will incur a 3% levy.

Additionally, both imported and locally assembled commercial vehicles, such as buses and trucks, will face a 1% levy on their value.

The levy is to be paid by the manufacturer or importer, and while modest in percentage terms, it is expected to raise vehicle prices across categories.

This measure is part of a broader fiscal strategy aimed at revenue generation and a gradual transition to cleaner vehicle technologies.

The impact of the newly proposed NEV Adoption Levy under Budget 2025–26 is expected to lead to a noticeable increase in car prices across various leading automotive brands in Pakistan.

For Changan, expected price hikes include the Alsvin 1.3L MT Comfort from Rs4.01 million to Rs4.18m, Alsvin 1.5L DCT Comfort from Rs4.65m to Rs4.74m, Alsvin 1.5L DCT Lumiere from Rs4,79m to Rs4.89m, and Alsvin Black Edition from Rs4.89m to Rs4.99m.

Price increases are also expected for the Oshan X7 Comfort from Rs8.29m to Rs8.46m, Oshan X7 FutureSense from Rs8.75m to Rs8.92m, and Oshan X7 FutureSense 7 Seat from Rs9.09m to Rs9.28m.

For Toyota, the expected price increases are: Yaris Sedan GLI MT 1.3 from Rs4.48m to Rs4.56m, ATIV MT 1.3 from Rs4.73m to Rs4.82m, GLI CVT 1.3 from Rs4.76m to Rs4.85m, and ATIV CVT 1.3 from Rs5.6m to Rs5.7m.

The Yaris ATIV X CVT 1.5 Beige Interior may rise from Rs6.25m to Rs6.38m, while the Black Interior variant could increase from Rs6.32m to Rs6.44m.

Corolla Altis models show expected hikes from Rs5.96m to Rs6.08m for the X Manual 1.6, Rs6.56m to Rs6.69m for the 1.6 X CVT-i, and Altis Grande X CVT-i 1.8 Black Interior from Rs7.55m to Rs7.69m.

Honda models are also expected to see upward revisions.

The Civic Oriel is projected to rise from Rs8.66m to Rs8.83m, while the Civic RS will increase from Rs9.89m to Rs10.09m.

Similarly, the City 1.5L CVT will go from Rs5.44m to Rs5.54m, City 1.5L ASPIRE M/T from Rs5.65m to Rs5.76m, City 1.5L ASPIRE CVT from Rs5.85m to Rs5.96m, BR-V i-VTEC S from Rs6.29m to Rs6.42m, HR-V VTI from Rs7.65m to Rs7.8m, and HR-V VTi-S from Rs7.89m to Rs8.05m.

Among other brands, the expected increases are: Chery Tiggo 4 Pro DEX Plus 1.5T from Rs6.93m to Rs7.07m, Tiggo 8 Pro 1.6 DEX Plus from Rs9.58m to Rs9.77m; DFSK Glory 580 1.5 CVT from Rs5.61m to Rs5.72m, Glory 580 1.8 CVT from Rs5.8m to Rs5.9m, and Glory 580 Pro from Rs6.79m to Rs6.9m.

The Haval Jolion 1.5T is expected to increase from Rs7.95m to Rs8.1m, while the Haval H6 1.5T is projected at Rs9.28m and the MG HS Trophy may rise from Rs8.19m to Rs8.36m.

Lastly, Jetour Dashing Deluxe could rise from Rs8.29m to Rs8.46m, and X70 Plus Deluxe from Rs8.49m to Rs8.66m.

These expected price adjustments reflect the anticipated impact of the NEV levy on conventional engine vehicles and point to a broader shift in the automotive market.

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