New policy targets tax defaulters, eases rules for motor dealers and updates insurance system
KARACHI: The Sindh Cabinet on Wednesday approved a series of reforms to the Excise Department’s vehicle registration, taxation and insurance framework, introducing stricter measures against tax-defaulter vehicles while providing relief to licensed motor dealers.
The meeting, chaired by Chief Minister Murad Ali Shah, endorsed a new policy for deregistering off-road and unserviceable vehicles as part of broader efforts to improve compliance, transparency and administrative efficiency.
Under the approved policy, owners of damaged, scrap or permanently unserviceable vehicles must apply for deregistration by September 30, 2026. Authorities will classify vehicles that have neither paid taxes nor submitted any declaration since July 2010 as off-road.
Officials said registrations of such vehicles with outstanding dues will be suspended after 30 days of non-compliance. If owners fail to clear their liabilities within 60 days, the registrations will be cancelled permanently.
Motor dealers receive operational relief
The cabinet also introduced a holding-period facility for licensed motor dealers purchasing vehicles for resale. Under the revised policy, dealers may retain unregistered vehicles for an initial six months before resale, with two optional extensions of three months each.
However, the total holding period cannot exceed 12 months. During this time, dealers must pay a reporting fee of Rs100 per vehicle and maintain a valid dealership licence throughout the holding period.
Officials said the measure aims to facilitate legitimate vehicle trading while ensuring proper regulatory oversight.
Insurance reforms to benefit vehicle owners
Meanwhile, the cabinet approved significant changes to the motor third-party insurance system. Under the revised policy, third-party insurance will remain valid until its original expiry date even after ownership of a vehicle changes.
Authorities said the reform would eliminate the need for new owners to purchase duplicate insurance policies immediately after a transfer, reducing financial costs and simplifying the ownership process.
The reforms received support from the Securities and Exchange Commission of Pakistan (SECP), the Central Depository Company (CDC) and representatives of the insurance industry.
Chief Minister Murad Ali Shah said the measures are designed to enhance public convenience, strengthen tax compliance, improve administrative transparency and modernize Sindh’s vehicle registration and insurance systems.
