Pakistan imposes excise duty on imported luxury vehicles

ISLAMABAD: Pakistan has decided to impose Federal Excise Duty (FED) on imported vehicles, including SUVs and luxury electric cars, Finance Minister Muhammad Aurangzeb said during his budget speech on Friday.

The minister said SUVs with engine capacities between 2,000cc and 3,000cc will now be subject to FED, while higher rates will be applied on imported vehicles above 3,000cc.

He added that luxury electric vehicles priced above Rs20 million will also come under the new tax regime as part of efforts to increase government revenue from high-end imports.

Aurangzeb said the new auto policy is currently under review by a committee formed by the prime minister.

However, he announced that incentives for electric motorcycles, rickshaws and buses will remain unchanged to support green transportation.

He further said a 1% sales tax facility is being proposed for imported electric trucks to encourage cleaner logistics solutions.

In a separate announcement, the finance minister said the Federal Excise Duty on business class air travel abroad has been abolished, providing relief to international travelers.

Officials said the measures reflect a mix of revenue-raising steps and targeted incentives aimed at supporting sustainable transport while broadening the tax base.