Pakistan has decided to scrap the five-year age cap on commercial imports of used vehicles from July 1, 2026, the Ministry of Commerce said. The announcement came in a clarification responding to a memorandum from the Federal Board of Revenue (FBR) dated October 23, 2026. The ministry said the age rule would stop applying beyond June 30, 2026.
The ministry said the federal cabinet approved the removal of the limit. Vehicles older than five years are therefore no longer barred from commercial import, but they remain subject to other import policy requirements. The ministry added that imported vehicles must still meet applicable environmental and safety standards.
Proposed auto policy and mini-budget plans
Media reports said the government is likely to introduce a mini-budget to put tax measures and levies under the new automotive policy. According to sources, electric vehicles (EVs) are expected to receive sales tax relief worth Rs85 billion.
The International Monetary Fund (IMF) has reportedly demanded that sales tax on EVs rise from 1% to 18%. Official government documents, however, suggest keeping the 1% rate on EVs valued up to $75,000, which accounts for the proposed Rs85 billion relief.
New levies aimed at replacing lost revenue
Sources said the Rs85 billion shortfall would be recovered through a separate plan. A finance bill may impose a Federal Excise Duty (FED) and an Automotive Development Levy to raise replacement revenue.
Under the proposed policy, vehicles with engine capacities between 1,001cc and 2,000cc would face a 2% levy, while those at 2,001cc and above would pay 10%. Official papers say the development levy would cover all petrol and Internal Combustion Engine (ICE) vehicles, whether assembled locally or imported.
A 10% Federal Excise Duty may also apply to EVs priced above Rs20 million, alongside a new carbon levy on petrol and ICE vehicles. The government expects the carbon levy to bring in Rs25 billion, while general levies on these vehicles are projected to generate Rs37 billion.
