Some Imported Cars to Get Cheaper, Others More Expensive Starting Today

The Federal Board of Revenue (FBR) has started collecting the newly introduced Special Excise Duty (SED) on imported vehicles from July 1, creating winners and losers in Pakistan’s auto market.

While lower customs duties under the government’s tariff rationalisation plan are expected to reduce the import tax burden on many passenger vehicles and electric vehicles priced below $75,000, luxury EVs and larger-engine imported SUVs and cars are expected to become more expensive after the imposition of steep new Special Excise Duties.

The new levy came into effect following the enforcement of the Finance Act 2026 and is being collected at the import stage under S.R.O. 1072(I)/2026 alongside customs duties.

Under the notification, the SED is collected on imported goods listed in Table IA of the First Schedule in the same manner and at the same time as customs duty under the Customs Act, 1969. Importers are required to pay the levy during customs clearance, with the same assessment, collection and recovery mechanisms applicable to customs duties.

The overall impact on imported vehicle prices, however, differs across categories.

Many imported passenger vehicles are expected to benefit from the government’s tariff rationalisation measures announced in the federal budget, which reduced customs duties across several tariff lines. The exact duty applicable to each vehicle depends on its Pakistan Customs Tariff (PCT) classification.

Similarly, imported electric cars and electric SUVs in completely built-up (CBU) condition valued at up to $75,000 remain exempt from the newly introduced Special Excise Duty, allowing them to benefit from lower import duties without facing the additional levy.

Luxury imported vehicles, however, will face significantly higher taxes.

Imported electric cars and electric SUVs in CBU condition valued above $75,000 and up to $110,000 are now subject to a 30 percent ad valorem Special Excise Duty, while those valued above $110,000 attract a 40 percent ad valorem levy.

Under the Finance Act 2026, imported motor cars, SUVs and other motor vehicles principally designed for the transport of persons—including station wagons, double-cabin (4×4) pickup vehicles and racing cars, but excluding auto-rickshaws and vehicles classified under heading 87.02—are subject to an 86 percent ad valorem Special Excise Duty if they have engine capacities of 2,000cc and above but not exceeding 3,000cc.

Vehicles in the same category with engine capacities exceeding 3,000cc are subject to a 92 percent ad valorem Special Excise Duty.

Although customs duties have been reduced across several vehicle categories, the newly imposed SED is expected to more than offset those reductions for luxury vehicles, resulting in higher import costs.

Full Effect

The changes form part of the government’s new tariff rationalization strategy aimed at lowering import duties on several categories while imposing bigger taxes on luxury and high-value imported vehicles.