The Government of Pakistan has proposed major changes to the automobile import tax structure under the Finance Bill 2026-27, introducing new duty rates that will significantly affect imported vehicles, electric cars, and consumer buying trends from July 1, 2026.
Under the proposed policy, imported vehicles with engine capacities between 2000cc and 3000cc will be subject to an 86% import duty, while vehicles above 3000cc will face an even higher 92% duty. These changes are expected to increase the cost of luxury and high-performance imported vehicles in Pakistan.
However, the government has proposed substantial relief for smaller and mid-sized vehicles. Duties on 1800cc vehicles are set to decrease from 156% to 74%, while taxes on vehicles above 1500cc will be reduced from 91% to 57%. Similarly, duties on vehicles between 1000cc and 1500cc will fall from 76% to 52%, and cars up to 850cc will see taxes reduced from 66% to 42%.
The revised tax policy reflects the government’s strategy to encourage the purchase of smaller and more fuel-efficient vehicles while discouraging the import of expensive luxury cars.
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The Finance Bill also introduces a new taxation framework for electric vehicles (EVs). EVs valued up to $75,000 will be taxed at 30%, while electric vehicles priced above $110,000 will face a 40% duty. The move aims to balance support for green transportation with revenue generation.
In addition, updated token tax rates based on engine size and vehicle model years will come into effect from July 1. These changes are expected to influence vehicle prices, import volumes, and consumer preferences across Pakistan’s automotive market.
Industry experts believe the new tax structure could make smaller vehicles more accessible while reshaping demand in the country’s rapidly evolving automobile sector.
