Business Desk 
Jun 21, 2025
A representational image of cars parked in a queue. — Reuters
In a significant policy shift, Prime Minister Shehbaz Sharif-led government has allowed the commercial import of five-year-old vehicles starting from September 2025.
According to the officials, these vehicles will be subject to an additional 40% customs duty, regardless of whether one or 200 vehicles are imported.
Officials from the Ministry of Commerce informed the committee that this is part of a broader adjustment in line with IMF requirements, under which import duties on vehicles will be reduced to zero over the next four years.
To meet this target, there will be a 10% reduction in duty on imported vehicles each year.
Currently, the baggage scheme only allows the import of vehicles up to three years old. The committee has recommended extending this to allow five-year-old vehicles under the baggage and commercial import schemes.
Moreover, officials confirmed that older vehicles, up to six or seven years, may be allowed in the future under the new policy.
As part of the new auto policy, duties on imported vehicles are expected to decline significantly. “Tariff is a fundamental issue, and we need support on this,” said Finance Minister Muhammad Aurangzeb during the session.
The FBR confirmed that tax on vehicles up to 850cc has been raised from 12.5% to 18%.
The FBR has proposed five amendments for preventing banks from incorporating expenses from the payment of taxes, including the rented building of banks and advances to non-performing loans.
It is worth noting that Pakistan intends to increase the manufacturing of electric vehicles (EVs) to 2.2 million units over the next five years, primarily electric motorbikes.
