Good News For Car Buyers; Government Approves Commercial Import of 5-Year-Old Vehicles

The government has decided to allow the commercial import of vehicles that are up to five years old starting from the next fiscal year. This was revealed during a briefing to the Senate’s Standing Committee on Finance by officials from the Federal Board of Revenue (FBR).

According to FBR officials, an additional 40% customs duty will be imposed on the import of these used vehicles. The government’s decision aligns with the International Monetary Fund’s (IMF) conditions, which require reducing import duties on vehicles to zero over the next four years. The duty will be cut by 10% each year, regardless of whether one vehicle or 200 are imported. However, the 40% extra customs duty on used vehicles will remain applicable.

Officials from the Ministry of Commerce informed the committee that the import of five-year-old vehicles will begin from September 2025. In the future, imports of six- and seven-year-old vehicles will also be allowed. The new auto policy aims to lower import duties further, making tariffs much cheaper.

The committee recommended allowing the import of five-year-old vehicles both under the baggage scheme and commercial import. However, ministry officials said that even under the baggage scheme, a 40% additional tax will be charged. Under the gift scheme, overseas Pakistanis can gift one vehicle to their family members.

FBR officials added that taxes on vehicles up to 850cc have been increased from 12.5% to 18%.

The committee also recommended removing the duty on the import of grandparent chickens, as requested by the poultry sector. Officials mentioned that the revenue earned from this duty is only around 30 million rupees.

Finance Minister Muhammad Aurangzeb told the committee that tariffs are a very sensitive issue and support is needed to implement these changes. Currently, the baggage scheme allows the import of vehicles that are only up to three years old.