The federal government has proposed new tax measures on imported vehicles, larger SUVs and luxury electric vehicles (EVs) as part of the budget for FY2026-27.
According to the budget speech, federal excise duty will be imposed on imported cars as well as SUVs with engine capacities exceeding 2000cc and up to 3000cc. The government has also proposed increasing duty on vehicles with engine capacities above 3000cc.
The proposed tax measures will also apply to luxury electric vehicles valued at more than Rs. 20 million. The government said the measures are part of its efforts to ensure a fairer distribution of the economic burden.
At the same time, the budget retains existing incentives for electric vehicles. The government announced that the current concessional tax regime for electric motorcycles, rickshaws, cars and buses will remain in place for another year.
The budget also proposes extending a 1 percent sales tax facility to imported electric trucks. According to the budget speech, the government wants to ensure that tax incentives intended to promote electric mobility are not utilized by buyers of extremely expensive electric vehicles.
