Budget 2025-26: Expected cut in car prices in Pakistan – July 2025

Good news may be coming for car buyers in Pakistan. The government is considering major tax cuts in the upcoming federal budget for the fiscal year 2025-26, which could lead to a drop in car prices after a long time.

The new budget is expected to be presented on June 2, but the final date depends on ongoing discussions with the International Monetary Fund (IMF). Pakistan is currently under the IMF’s Extended Fund Facility (EFF) loan program, and any new tax measures need to be aligned with the IMF’s suggestions.

Expected Tax Cuts on Cars and Auto Parts

As part of budget planning, reports suggest a proposal to reduce customs duty on vehicles by up to 20%. Currently, these duties range from 15% to 90%, depending on the vehicle type. A 20% cut could mean a big drop in car prices across the country.

There’s also a suggestion to remove the 2% additional customs duty on auto parts. The 4% to 7% duty slab on parts may also be reduced step by step.

These changes, if approved, will help the automobile industry and make cars more affordable for the public.

Cuts Proposed for Other Sectors Too

The government is also looking to reduce duties on industrial raw materials and semi-finished goods. These include sectors such as textiles, chemicals, plastic, iron, and steel. The goal is to lower production costs and boost local industries.

Revenue Targets and IMF Conditions

The Federal Board of Revenue (FBR) is aiming for a tax target of Rs14,305 billion in the new budget. Around Rs600 billion is expected to come from enforcing tax laws more strictly. Another Rs400 billion could be generated through new tax policies.

The IMF, however, is pushing Pakistan to document the economy better. They believe this is the key to improving revenue without putting extra pressure on common people.

More details about the proposed tax cuts and the final budget will be revealed once IMF talks are completed.