New tax on used imported cars up to 1500cc – July 2025

The federal government has reduced taxes and duties on used imported cars starting July 2025 as the new fiscal year 2026 budget comes into effect.

This decision applies to non-hybrid, hybrid, and electric vehicles of different engine sizes and is expected to lower the prices of imported cars, jeeps, vans, and other vehicles in Pakistan.

This step is part of the recommendations made by the International Monetary Fund (IMF), which advised Pakistan to open up commercial imports and cut taxes on imported cars to make the auto market more competitive.

In another major change, the government has allowed the import of used vehicles up to 5 years old, instead of the previous limit of 3 years.

In the future, even vehicles up to 10 years old might be permitted, which would give buyers more affordable choices. For used imported cars with engine capacity between 1301cc and 1500cc, the tax has been reduced by 9%, from the previous rate of 174% to the new rate of 165%.

As a result, the prices of cars in this category are expected to drop in the local market. However, while the government has given relief on imported vehicles, it has increased taxes on locally assembled cars and motorcycles. This change will likely increase the prices of locally made vehicles in Pakistan.

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