Govt imposes FED on imported vehicles, SUVs in federal budget for FY-2026-27

ISLAMABAD – The federal government on Friday decided to impose Federal Excise Duty (FED) on imported vehicles as part of the new taxation measures announced in the federal budget for Financial Year-2026-27. Finance Minister Muhammad Aurangzeb, while presenting the federal budget in the National Assembly, said that FED would also be applied to sport utility vehicles (SUVs) with engine capacities ranging from 2,000cc to 3,000cc. He further stated that the FED on vehicles above 3,000cc would be increased under the new proposals. The government has also proposed imposing Federal Excise Duty on electric vehicles priced above Rs20 million. The finance minister said that a new auto policy is currently under consideration by a committee constituted by the prime minister. However, he clarified that the existing concessional regime for electric motorcycles, rickshaws and buses would remain unchanged. He also announced a proposal to introduce a 1 per cent sales tax facility on imported electric trucks to support cleaner transport initiatives. In a separate announcement during his budget speech, Muhammad Aurangzeb said that the federal government has abolished Federal Excise Duty on international business class air travel. The measures are part of broader fiscal reforms aimed at rationalising taxation in the automobile sector, broadening the tax base, and encouraging investment in environmentally sustainable transport options. Budget 2026-27: Toyota Corolla top variant to cost Rs80Lac after 6% Environmental Levy