Government Introduces New Policy for Electric Vehicles

The government has decided to provide incentives for electric vehicles under the new auto policy. It has been decided to increase sales tax on locally manufactured electric vehicles from 17% to 1% and customs duty on spare parts to 1%.

The federal cabinet has approved a new auto industry and export policy. The new auto policy proposes tax breaks on small vehicles. Tax exemption is proposed for vehicles up to 850 cc. It is proposed to abolish additional customs duty on small vehicles. It is proposed to abolish excise duty on locally manufactured vehicles.

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According to the government’s new auto policy, holding tax on small vehicles is also proposed to be abolished. The tax exemption is also proposed to apply to small imported vehicles. It is proposed to review the tax exemption on imported vehicles every year.

Under the new auto policy, it is proposed to set an export target for vehicles. It is proposed to give 10% export target to car manufacturers by 2026. The target for automakers is to export 2% of vehicles next year. It also includes a target of exporting 4% of vehicles to automakers in 2024. Car companies are targeting 7% of vehicle exports in 2025. Measures are proposed to increase exports of automobiles and spare parts. It is proposed that the Ministry of Commerce be given the responsibility of negotiating with foreign countries. Tax incentives are proposed for exports of vehicles and spare parts.

Customs duty on CBU imports of electric vehicles will be reduced from 25% to 10%. One percent customs duty will be levied on electric parts of motorcycles. It has been decided to reduce sales tax on hybrid electric vehicles to 8.5%. Regulatory duty on import of hybrid CBU will be reduced. Regulatory duty on hybrid vehicles above 1800cc will be reduced by 15%.

Under the new auto policy, it has been decided to reduce the regulatory duty on hybrid vehicles below 1800cc to zero. Strict decisions have been taken to ensure safety measures under the auto policy. It has been decided to ban the import of vehicles for non-compliance with safety standards. It has also decided to ban the manufacture of local vehicles for non-compliance with safety standards. After June 30, 2022, there will be restrictions on non-compliance with safety standards.