New tax, duty proposals unveiled for imported vehicles, cars in federal budget 2026–27

ISLAMABAD – The federal budget proposals for 2026–27 have outlined a revised tax and customs duty structure for imported vehicles, including both reductions and increases across different engine capacities and categories. The Finance Bill said that from July 1, customs duty on imported vehicles with engine capacity between 2,000cc and 3,000cc will be set at 86 percent while vehicles above 3,001cc will be subject to a 92 percent duty. For smaller engine categories, the proposed structure reflects significant reductions. Duty and taxes on 1,800cc vehicles will be reduced from 156 percent to 74 percent. Similarly, for vehicles above 1,500cc, the rate will decrease from 91 percent to 57 percent. Imported vehicles in the 1,000cc to 1,500cc category will face a reduced duty of 52 percent, down from 76 percent, while the rate for 850cc vehicles will drop from 66 percent to 42 percent. The Finance Bill also proposes that no special excise duty will be imposed on vehicles up to 1,800cc under the new auto policy. For electric vehicles (EVs), the government has proposed a 30 to 40 percent customs duty depending on value. EVs valued up to 75,000 US dollars will be taxed at 30 percent, while those exceeding 110,000 US dollars will attract a 40 percent duty from July 1. In addition, a one-time fixed tax of Rs10,000 has been proposed for vehicles up to 1,000cc at the federal level. For vehicles manufactured before 2010 with engine capacity up to 1,000cc, a token tax of Rs20,000 is suggested. For vehicles between 1,001cc and 1,300cc, a token tax of 0.3 percent of the total invoice value will apply. This will later be revised to 0.25 percent of the total invoice value from July 1. The Finance Bill further proposes a Rs2,500 token tax for pre-2010 models, while post-2010 models will be subject to a Rs6,200 annual token tax at the federal level. Import Duty on Cars above 1800cc may be cut from 156% to 74%