ISLAMABAD: The federal government has unveiled major changes to taxes and customs duties on imported vehicles under the Finance Bill 2026-27, with revised rates set to take effect from July 1, 2026.
According to the Finance Bill, imported vehicles with engine capacities ranging from 2,000cc to 3,000cc will be subject to an 86% customs duty, while imported vehicles with engine capacities of 3,001cc and above will face a 92% duty rate.
The government has also proposed significant reductions in duties and taxes on smaller imported vehicles. The total tax burden on 1,800cc vehicles will be reduced from 156% to 74%, while duties on vehicles above 1,500cc will be cut from 91% to 57%.
Similarly, imported vehicles with engine capacities between 1,000cc and 1,500cc will see duties and taxes reduced from 76% to 52%, while imported vehicles up to 850cc will face a reduced duty rate of 42%, down from 66%.
No Special Excise Duty on Vehicles up to 1,800cc
The Finance Bill states that under the new auto policy, no Special Excise Duty (SED) will be imposed on vehicles with engine capacities up to 1,800cc, providing relief to consumers and importers in this category.
New Customs Duties on Imported Electric Vehicles
The government has also proposed customs duties on imported electric vehicles (EVs). Large EVs valued at up to $75,000 will be subject to a 30% customs duty, while EVs worth more than $110,000 will face a 40% customs duty from July 1.
New Fixed and Token Taxes on Vehicles
In addition to customs duty changes, the Finance Bill introduces new vehicle taxation measures at the federal level.
From July 1, a one-time fixed tax of Rs. 10,000 will be imposed on vehicles with engine capacities up to 1,000cc.
For vehicles manufactured before 2010 with engine capacities up to 1,000cc, the annual token tax will be Rs. 20,000.
Vehicles with engine capacities ranging from 1,001cc to 1,300cc will be subject to a token tax equal to 0.3% of the total invoice value, while the general federal token tax rate will be set at 0.25% of the invoice value.
The Finance Bill further proposes a token tax of Rs. 2,500 on vehicles manufactured before 2010, while vehicles manufactured after 2010 will be subject to a token tax of Rs. 6,200.
The proposed measures are part of the government’s broader effort to reform the automobile sector, rationalize import duties, and generate additional revenue under the 2026-27 federal budget.