Govt to End Tax Exemptions on Locally Made Hybrid, Electric Vehicles and Bikes

The federal government will end the sales tax exemption on locally manufactured hybrid and electric vehicles, including bikes, from the next fiscal year. According to a document issued by the Ministry of Industries and Production, currently, locally produced hybrid and electric vehicles enjoy sales tax relief until June 30, 2026, under the Eighth Schedule.

The document states that locally manufactured hybrid and electric vehicles with engines up to 1800cc are subject to an 8.5% sales tax, with approximately 10.5% sales tax exemption currently applied. Vehicles with engine capacities between 1801cc and 2500cc face a 12.75% sales tax, with a 5.25% exemption.

Furthermore, locally manufactured vehicles using 50kW batteries currently benefit from a 12.5% sales tax exemption. Additionally, electric transport buses with a seating capacity of 25 are subject to a 1% sales tax.

The move signals the government’s intent to gradually phase out incentives for locally produced hybrid and electric vehicles, impacting manufacturers and consumers alike.

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