Pakistan Budget 2026-27: Imported Cars Face Up to 92% Excise Duty

The cost of owning a luxury imported vehicle in Pakistan may soon rise dramatically. After the National Assembly approved Budget 2026-27, revised tax proposals for imported vehicles revealed a sharp increase in Federal Excise Duty (FED) on larger engine petrol cars and SUVs. While the final position will only become official once the Finance Act is published, the proposed rates are already creating concern among importers, dealers, and prospective buyers.

The biggest surprise is the jump in excise duty on imported petrol vehicles above 2,000cc. Meanwhile, electric vehicles (EVs) largely retain the structure proposed in the original Finance Bill, signaling that policymakers continue to favor cleaner mobility over conventional fuel-powered luxury imports. For anyone considering importing a luxury SUV, premium sedan, or high-value EV, these changes could significantly affect purchasing decisions over the coming months.

Key Budget 2026-27 Changes for Imported Vehicles

The National Assembly Standing Committee on Finance recommended substantial increases in FED for imported petrol vehicles.

New Proposed FED Rates

These rates are significantly higher than the earlier proposals of 40% and 41% respectively.

Imported EV Tax Structure Remains Unchanged

For electric vehicles, the government has maintained the original Finance Bill proposal:

This approach suggests policymakers want to discourage luxury vehicle imports while still supporting broader EV adoption.

Why Has the Government Increased Taxes on Imported Cars?

Pakistan’s automotive taxation has long been used as a tool for three major objectives:

1. Protecting Local Manufacturing

Imported vehicles compete directly with locally assembled models. Higher duties make imports more expensive and provide breathing room for domestic assemblers.

2. Reducing Pressure on Foreign Exchange

Vehicle imports consume substantial foreign currency reserves. Pakistan continues to face balance-of-payment challenges, making import management a fiscal priority.

3. Increasing Tax Revenue

The federal government is under pressure to increase revenue collection. Luxury vehicles are often viewed as a segment capable of absorbing additional taxation.

How Much More Expensive Could Imported Vehicles Become?

For high-end buyers, the increase could translate into millions of rupees in additional costs. Consider an imported luxury SUV valued at Rs 30 million before taxes. An increase from around 40% duty levels to 86% or 92% could substantially raise the landed cost after customs duties, FED, registration charges, and associated import expenses.

While exact figures depend on valuation and customs calculations, dealers expect many premium imported vehicles to experience noticeable price increases if the proposed structure becomes law.

Impact on Pakistan’s Used Car Market

One of the less-discussed consequences may be pressure on the used imported vehicle market.

When new imports become more expensive:

• Existing imported vehicles often appreciate in value.
• Supply becomes tighter.
• Buyers shift toward used options.
• Resale values for popular imported SUVs may strengthen.

Historically, taxation changes have influenced resale trends in Pakistan, particularly for Japanese imported vehicles and luxury SUVs. Owners of well-maintained imported vehicles could benefit from stronger resale demand over the next year if imports slow down.

What This Means for Electric Vehicles

The EV story is very different. While luxury EVs above certain price thresholds will face FED, vehicles valued below $75,000 remain exempt under the proposed framework.

This creates an interesting market dynamic:

Potential Benefits for EV Buyers

• Lower running costs compared to petrol vehicles
• Reduced fuel expenditure
• Continued policy support
• Lower environmental impact
• Increasing charging infrastructure

For many urban buyers, EV ownership costs are already significantly lower than conventional fuel-powered alternatives. The government’s decision to leave EV taxation largely unchanged may encourage more consumers to evaluate electric options instead of imported petrol SUVs.

Expert Analysis: A Shift Away From Luxury Fuel Vehicles

The proposed budget measures reveal a broader policy direction. Rather than applying tax increases across the entire automotive sector, the government appears to be targeting specific categories:

• Large-engine imported petrol vehicles
• Luxury SUVs
• Premium EVs above certain value thresholds

At the same time, policymakers continue discussing broader automotive reforms and future auto policy adjustments. Industry observers expect additional developments regarding hybrid vehicles, EV incentives, and localization requirements in the coming months. The message is becoming clearer: future incentives are likely to favor cleaner and more efficient mobility solutions.

Why Vehicle Inspection Matters More Than Ever

As vehicle prices rise, buyers cannot afford expensive mistakes.

A poorly maintained imported vehicle can lead to:

• Costly engine repairs
• Transmission issues
• Hidden accident damage
• Lower resale value
• Unexpected maintenance expenses

Before purchasing any imported vehicle, buyers should verify:

• Auction sheet authenticity
• Accident history
• Odometer consistency
• Mechanical condition
• Hybrid battery health (where applicable)

Wise Wheels helps buyers make informed decisions through professional vehicle inspections and auction sheet verification services.

With a comprehensive 200+ point inspection report starting from just Rs 3,500, buyers can identify hidden issues before committing to a purchase. This small investment can potentially save hundreds of thousands of rupees in future repair costs.

What Buyers Should Do Before the Finance Act Is Released

The current proposals still require confirmation through the final Finance Act.

Potential buyers should:

1. Monitor official notifications closely.
2. Verify final duty rates before making import decisions.
3. Calculate total ownership costs rather than focusing only on purchase price.
4. Consider EV alternatives where practical.
5. Obtain a professional inspection before purchasing any used imported vehicle.

Acting solely on rumors could result in costly mistakes.

Future Outlook for Pakistan’s Auto Industry

Several trends are likely to shape the market during FY 2026-27:

Rising Interest in EVs

Tax incentives and fuel savings continue to make EVs attractive.

Stronger Demand for Used Imports

Higher import costs could push buyers toward existing imported stock.

Increased Focus on Local Assembly

Local manufacturers may gain a competitive advantage if imported vehicle prices rise further.

Greater Importance of Vehicle Verification

As vehicle values increase, buyers will demand more transparency regarding condition, accident history, and auction records. The final Finance Act will determine how aggressively these trends develop.

Frequently Asked Questions

Will imported cars become more expensive in Pakistan after Budget 2026-27?

If the proposed rates are finalized, imported petrol vehicles above 2,000cc are expected to become significantly more expensive due to higher FED.

What is the proposed FED on imported vehicles?

The proposal includes 86% FED for imported vehicles between 2,000cc and 3,000cc and 92% FED for vehicles above 3,000cc.

Are imported EVs exempt from FED?

Only imported EVs valued up to $75,000 remain exempt under the proposed structure. Higher-value EVs will face FED ranging from 30% to 40%.

Will resale values of imported vehicles increase?

Potentially. Higher import costs can reduce supply and support stronger resale values for existing imported vehicles.

Should buyers get an inspection before purchasing a used imported car?

Absolutely. A professional inspection can reveal accident history, mechanical issues, and hidden repair costs that may affect ownership expenses and resale value.

Conclusion

Budget 2026-27 could become one of the most significant turning points for Pakistan’s imported vehicle market in recent years. The proposed jump to 86% and 92% FED on large-engine imported petrol vehicles signals a tougher environment for luxury imports while maintaining relative support for electric mobility.

For buyers, the smartest approach is patience, verification, and careful cost analysis. Before purchasing any imported vehicle, verify the final tax structure, check the vehicle’s history, and invest in a professional inspection. With Wise Wheels’ 200+ point car inspection service starting from Rs 3,500, buyers can make confident decisions and avoid costly surprises.

Keep reading Wise Wheels blog for the latest updates on Pakistan’s auto industry, vehicle taxes, market trends, inspections, auction sheets, and smart car-buying advice.