In a significant development announced on Friday, Finance Minister Muhammad Aurangzeb revealed that the government has introduced a Federal Excise Duty (FED) on imported vehicles as part of the newly unveiled budgetary framework. This move aims to regulate the automotive sector and generate additional revenue amid evolving economic conditions.
The minister elaborated that the excise duty will specifically target sport utility vehicles (SUVs) with engine capacities ranging from 2,000cc to 3,000cc. Additionally, vehicles with engine sizes exceeding 3,000cc will face an increased excise duty, reflecting the government’s intent to impose higher levies on larger, more fuel-consuming automobiles.
Notably, the budget also proposes a fresh duty on luxury electric vehicles priced above Rs20 million, marking a strategic shift in taxation policy towards high-end electric cars. This comes as the government continues to encourage the adoption of electric mobility through various incentives, while balancing fiscal needs.
Meanwhile, Aurangzeb highlighted that a committee appointed by the prime minister is currently reviewing a new auto policy, which is expected to bring further reforms to the sector. Despite the new duties, existing tax benefits will remain intact for electric motorcycles, rickshaws, and buses, supporting the growth of environmentally friendly transportation options. Furthermore, a reduced sales tax rate of 1 percent has been proposed for imported electric trucks, signaling targeted support for commercial electric vehicles.
In a related fiscal adjustment, the Federal Excise Duty on business class air travel abroad has been eliminated under the new budgetary measures, potentially easing costs for corporate travelers. These comprehensive changes reflect the government’s broader strategy to balance economic growth, environmental concerns, and revenue generation in the transportation sector.
