Summary The Pakistani government announced significant changes to vehicle import duties and taxes from July 1st, including increased levies for luxury vehicles and considerable reductions for smaller cars
ISLAMABAD (Dunya News) – From July 1, the landscape for vehicle imports in Pakistan will undergo a significant transformation as the federal government prepares to implement new customs duty and tax rates. These adjustments, approved by Parliament under the Finance Bill 2026-27, will impact various vehicle categories, both imported and electric.
The key highlight of the new tax structure is the imposition of higher duties on luxury and high-capacity imported vehicles. Specifically, a 92% duty will be applied to imported vehicles with an engine capacity of 3001cc or larger. Furthermore, a substantial 86% duty will be levied on imported vehicles in the 2000cc to 3000cc range.
While the new tax regime targets larger imported vehicles, it also offers notable relief for smaller, more popular categories of imported cars.
The total duty and tax on 1800cc vehicles have been reduced from 156% to 74%. Similarly, the tax burden on vehicles larger than 1500cc has been lowered from 91% to 57%. Furthermore, imported vehicles with an engine capacity between 1000cc and 1500cc will see their total duty and tax reduced from 76% to 52%, and for vehicles with an 850cc engine capacity, the rate will drop from 66% to 42%.
These adjustments in vehicle taxes are expected to impact the imported car market significantly.
Consumer demand for different vehicle categories may shift, with smaller cars potentially becoming more attractive due to the reduced tax burden.
The higher duties on larger vehicles, on the other hand, could lead to a decline in imports and sales in this segment.
The impact on the domestic auto industry is also worth noting, as the new tax structure could create opportunities for local manufacturers.
