A Detailed Breakdown of Proposed New Taxes on Cars in the Mini-Budget

The federal government presented the Finance (Supplementary) Bill 2021 in parliament for approval on Thursday. The bill has proposed to withdraw a wide range of exemptions to generate additional revenue of Rs. 343 billion.

Where the auto sector is concerned, the bill has increased the sales tax on all combustible-engine cars, hybrid, and electric vehicles, imposed higher federal excise duty (FED) on both locally produced and imported cars, and announced an increase in the advance tax on registration of new cars.

The government had recently approved the Automotive Industry Development and Export Policy (AIDEP) 2021-26 which called for a series of tax exemptions for automakers to reduce the car prices in Pakistan. Once the Finance (Supplementary) Bill 2021 receives parliamentary approval, the car prices will go up significantly instead of coming down.

Here is a detailed breakdown of the proposed taxes on the auto industry.

Sales Tax

The sales tax has gone up across the board with Hybrid and imported Electric vehicles witnessing the largest increase despite the government’s announcements regarding the promotion of climate-friendly cars. All cars, except small cars, do not get any sales tax exemptions under the proposed Finance bill.

Category Capacity Previous Tax Proposed Tax Increase
Combustible engine 850cc or above 12.7% 17% 4.5%
Hybrid Up to 1800cc 8.5% 12.5% 4%
Imported Electric 5% 17% 12%


The government is also increasing the Federal Excise Duty on all combustion-engine vehicles. The same FED was previously reduced for small to medium cars but the government has now decided to increase it even more.

Imported Cars
Capacity Previous Tax Proposed Tax Increase
1001cc-1799cc 5% 10% +5%
1800cc-3000cc 25% 30% +5%
3001cc-above 30% 40% +10%
Locally Assembled Cars
Capacity Previous Tax Proposed Tax Increase
1001cc-2000cc 2.5% 5% +2.5%
2001cc-above 5% 10% +5%
3001cc-above 30% 40% +10%
Double-Cabin Pick-ups
Category Previous Tax Proposed Tax Increase
Imported 25% 30% +5%
Locally made 7.5% 10% +2.5%

Advance Tax on Registration

Car buyers will need to pay up extra Advance Tax at the time of registration for their vehicles. The amount has been doubled across the board.

Capacity Previous Tax (Rs.) Proposed Tax (Rs.) Increase (Rs.)
1000cc 50,000 100,000 +50,000
1001cc-2000cc 100,000 200,000 +100,000
2001cc-above 200,000 400,000 +200,000


  • Car prices have been doubled in last three years & now these taxes. What Govt is going to do?

  • Aap nay ghabrana Nahi aur yeh country dunya mein 2nd Somalia bannay ja Raha hay. Iss nay too mulk say bhaag Jana hay .Awam Mary ya jiyee iss say kiya farq parta hay Inn ko. Lanat aisy hakoomat per aur in per Allah Ki Lanat.iss say too wohi chhoor aur lutaray he behtr thay Jo Kuch na Kuch too KR jatay thay.

  • close