Federal Excise Duty Added on Imported Vehicles in Budget 2026-27

Pakistan’s federal government has proposed a new Federal Excise Duty on imported vehicles in Budget 2026-27, targeting high-capacity cars, SUVs and other passenger vehicles brought into the country.

The measure has been included in the Finance Bill 2026 and is expected to take effect from July 1, 2026, subject to approval during the budget process. The proposal inserts a new table for imported motor vehicles under the Federal Excise framework, covering vehicles mainly designed for the transport of persons.

Under the proposed change, imported motor cars, SUVs and other motor vehicles with engine capacity above 2,000cc will attract a fresh FED. Auto rickshaws have been excluded from the category.

The duty structure proposed in the bill is as follows:

 

 

Ad valorem duty means the tax is charged as a percentage of the vehicle’s value. This means the higher the import value of a covered vehicle, the larger the tax amount payable.

The proposal is likely to affect premium imported cars and luxury SUVs the most, especially models with larger engines. Vehicles falling in the above-2,000cc segment are already positioned in the higher price bracket, and the additional FED may further increase landed costs for importers and buyers.

The new duty also covers imported motor vehicles under relevant customs headings, including passenger cars, station wagons, double-cabin 4x4 pickup vehicles and racing cars. Four-wheeler electric vehicles are also referenced in the new table until June 30, 2027, while separate provisions in the bill deal with imported electric cars and electric SUVs based on import value.

For consumers, the immediate impact may come through higher showroom prices if the proposed FED is passed and applied. Dealers importing premium vehicles may factor the additional duty into final selling prices, while buyers planning imports after July 1 could face a higher tax burden.

The measure appears aimed at raising revenue from luxury and higher-capacity imported vehicles while keeping smaller vehicles outside this specific FED slab. It may also influence buying patterns in the auto market, where some customers could shift toward locally assembled vehicles, smaller-engine options or lower-duty electric models.

Pakistan’s imported vehicle market has remained sensitive to changes in duties, taxes, exchange rates and import rules. Any additional levy on high-end vehicles can quickly affect demand because imported cars already carry multiple cost layers, including customs duty, sales tax, withholding tax and registration-related charges.

Industry stakeholders are expected to watch the final passage of the Finance Bill closely. If approved in its current form, the new FED rates will become part of the tax cost for covered imported vehicles from the start of the new fiscal year.

The proposal will move through the budget approval process before implementation, and any change in the final Finance Act may alter the duty structure.

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