Pakistan’s imported vehicle market is entering a new phase after the implementation of revised tax measures from July 1.
The Federal Board of Revenue has started collecting the newly introduced Special Excise Duty on imported vehicles. As a result, the latest policy changes are expected to create both winners and losers across different vehicle categories.
While some imported passenger vehicles may become more affordable, several luxury vehicles and premium electric models are likely to become significantly more expensive.
The changes came into effect under the Finance Act 2026 and are now being collected during customs clearance.
New Tax Rules Begin Reshaping Imported Vehicle Costs
The newly introduced Special Excise Duty is being collected alongside customs duties.
According to the revised framework, importers must pay the levy during customs clearance under existing customs collection procedures.
However, the impact does not remain the same across all vehicle categories.
Instead, pricing outcomes now depend on vehicle type, value, engine size, and customs classification.
Therefore, buyers may experience different price changes depending on the vehicle they intend to import.
Which Imported Vehicles May Become Cheaper?
Several imported passenger vehicles are expected to benefit from the government’s tariff rationalisation measures.
The federal budget reduced customs duties across multiple tariff categories.
Consequently, many passenger vehicles may now face a lower import tax burden.
The exact benefit depends on the Pakistan Customs Tariff classification assigned to each vehicle.
Electric vehicles also receive selective relief.
Imported electric cars and electric SUVs arriving in completely built-up condition and valued up to $75,000 remain exempt from the Special Excise Duty.
As a result, these vehicles can benefit from reduced customs duties without facing additional excise charges.
This adjustment may improve affordability for selected imported EV buyers.
Luxury Electric Vehicles Face Higher Costs
While lower-value electric vehicles receive relief, premium EV buyers will experience the opposite effect.
Imported electric cars and electric SUVs valued above $75,000 and up to $110,000 are now subject to a 30 percent ad valorem Special Excise Duty.
Meanwhile, vehicles valued above $110,000 face an even higher 40 percent ad valorem levy.
Therefore, premium electric vehicle imports are expected to become considerably more expensive.
Although customs duties have been lowered in several categories, the new excise burden may outweigh those reductions.
Larger Engine Imported Vehicles See Steep Tax Increases
The Finance Act 2026 also introduces aggressive taxation for larger-engine imported vehicles.
The revised rules apply to imported motor cars and SUVs primarily designed for passenger transport.
The category also includes station wagons, double-cabin four-wheel-drive pickup vehicles, and racing cars.
However, auto-rickshaws and vehicles classified under heading 87.02 remain excluded.
Imported vehicles with engine capacities from 2,000cc to 3,000cc now face an 86 percent ad valorem Special Excise Duty.
Meanwhile, vehicles with engine capacities above 3,000cc attract an even steeper 92 percent ad valorem levy.
Consequently, larger imported vehicles may become substantially costlier despite lower customs duties.
Full Impact Across Vehicle Categories
Imported electric cars and SUVs up to $75,000
- Lower customs duties under tariff rationalisation
- No Special Excise Duty
- Lower overall import tax burden expected
Imported electric cars and SUVs from $75,001 to $110,000
- Reduced customs duties
- 30 percent Special Excise Duty
- Higher import costs expected
Imported electric cars and SUVs above $110,000
- Lower customs duties
- 40 percent Special Excise Duty
- Significant increase in import expenses expected
Imported passenger vehicles below 2,000cc
- Reduced customs duties across several categories
- No engine-based Special Excise Duty
- Lower import burden for many models
Imported vehicles from 2,000cc to 3,000cc
- Customs duty reductions may apply
- 86 percent Special Excise Duty
- Higher overall pricing expected
Imported vehicles above 3,000cc
- Customs reductions may apply
- 92 percent Special Excise Duty
- Major increase in total import costs expected
Government Shifts Focus Toward Higher Taxes on Premium Imports
The revised taxation policy reflects a broader tariff rationalisation strategy.
The government appears focused on lowering duties for selected categories while increasing taxes on luxury and high-value imports.
As these measures begin taking effect, the imported vehicle market may gradually shift toward lower-value and more cost-efficient models.
For buyers, understanding the new tax structure could become increasingly important before making purchase decisions.
