ISLAMABAD: Pakistan has decided to abolish the five-year age limit on the commercial import of used vehicles from July 1, 2026, the Ministry of Commerce said.
In a clarification issued in response to an October 23, 2026 memorandum by the Federal Board of Revenue (FBR), the ministry said the age restriction on used vehicle imports would no longer apply after June 30, 2026.
The ministry said the decision to remove the age limit for the commercial import of used vehicles was approved by the federal cabinet. Under the decision, the restriction on importing used vehicles more than five years old has been abolished.
However, the commercial import of used vehicles will remain subject to other import policy requirements. Imported vehicles must also comply with applicable environmental and safety standards, the ministry clarified.
Meanwhile, the government is likely to introduce a mini-budget to implement tax measures and levies under the new automotive policy, ARY News reported.
According to sources, electric vehicles (EVs) are expected to receive sales tax relief worth Rs85 billion under the proposed policy.
The International Monetary Fund (IMF) has reportedly demanded an increase in sales tax on EVs from 1% to 18%. However, official government documents suggest maintaining the 1% sales tax on EVs valued at up to $75,000, accounting for the proposed Rs85 billion tax relief.
Sources said the Rs85 billion tax shortfall would be recovered through an alternative plan. A finance bill may be introduced to impose a Federal Excise Duty (FED) and an Automotive Development Levy to generate replacement revenue.
Under the proposed auto policy, a 2% levy will be imposed on vehicles with engine capacities between 1,001cc and 2,000cc, while a 10% levy will apply to vehicles with engine capacities of 2,001cc and above.
Official documents state that the Automotive Development Levy will apply to all locally assembled and imported petrol and Internal Combustion Engine (ICE) vehicles.
Furthermore, a 10% Federal Excise Duty may be imposed on EVs priced above Rs20 million, alongside a new carbon levy on petrol and ICE vehicles.
The government expects to collect Rs25 billion through the carbon levy on petrol, diesel and ICE vehicles, while general levies on these vehicles are expected to generate Rs37 billion.
