Pakistan’s car import tax rates depend primarily on engine capacity: vehicles below 1800cc are charged a fixed dollar-denominated customs duty set by government notification, while vehicles of 1800cc and above are taxed as a percentage of the assessed value, with customs duty, sales tax, federal excise duty, regulatory duty, additional customs duty, and withholding tax stacking on top of each other. The Federal Board of Revenue (FBR) administers the charges under SRO 577(I)/2005 and its amendments, and the total tax bill on a larger-engine car often rivals the price of the vehicle itself.
Vehicles Below 1800cc: Fixed Dollar Duty
Under SRO 577(I)/2005, cars with an engine displacement below 1800cc are assessed a flat duty denominated in US dollars rather than a percentage of the car’s value.1Federal Board of Revenue. SRO 577(I)/2005 The practical effect is a predictable cost that does not swing with the invoice price of the vehicle. The specific dollar amounts sit in FBR notifications and can shift meaningfully between budget cycles, so the figure that applies is the one in force on the date of clearance, not the date of purchase.
Vehicles 1800cc and Above: Ad Valorem Stack
Once engine displacement reaches 1800cc, the flat-duty regime ends and the car is taxed as a percentage of its assessed value. Several charges apply in sequence, each calculated on a base that already includes the earlier layers:
- Customs Duty. The base import levy, with rates varying by engine displacement bracket.
- Sales Tax. Applied at 17% on most conventional vehicles.
- Federal Excise Duty. Ranges from 2.5% for smaller engines up to 30% for the largest displacement categories.2Trade Information Portal of Pakistan. Tariff Rate – Federal Excise Duty on Vehicles
- Regulatory Duty. An additional charge adjusted frequently through finance bills. The 2025 Finance Act cut regulatory duty on cars above 1800cc by 40%, though the baseline was steep to begin with.
- Additional Customs Duty. A supplementary levy that adds another percentage layer on top of the base customs duty.
- Withholding Tax. Collected at the import stage as an advance income tax payment. This amount can be adjusted against the importer’s annual tax return.
Because federal excise duty alone climbs to 30% at the top of the range, and because customs duty, regulatory duty, and additional customs duty each pile on separately, a large-displacement car can carry a duty and tax burden well above its foreign purchase price.
Hybrid and Electric Vehicle Rates
Pakistan’s Automotive Industry Development and Export Policy (AIDEP) 2021–2026 pulls electrified vehicles out of the ordinary rate schedule. Fully electric vehicles are charged sales tax at 1%, against 17% for conventional cars. Hybrid electric vehicles and plug-in hybrids sit between the two, at 8.5% sales tax. Customs duties on EV-specific components are set at 1%, with hybrid-exclusive parts at 3–4%. These concessions have been under review, and proposals to raise the hybrid rate to 18% have circulated, so importers should confirm the rates in force at the time of shipment.
Depreciation Allowance on Duties
The FBR allows depreciation on duties and taxes at 1% per month based on the age of the vehicle, which reduces the total payable amount for older cars within the permitted age range.3Federal Board of Revenue. Vehicles The reduction applies to the calculated duty figure itself, not to the vehicle’s assessed value, so the benefit compounds only up to the age cap that governs personal imports.
Who Is Eligible to Import in the First Place
These rates are only relevant if you qualify to import. Only overseas Pakistanis who meet strict residency requirements can bring in a used vehicle for personal use, and the government abolished the Personal Baggage Scheme through SRO 61(1)/2026 on January 15, 2026, after concluding it was being exploited for commercial resale. Two pathways remain: the Gift Scheme, which allows an overseas Pakistani to send a vehicle to a close relative resident in Pakistan, and the Transfer of Residence Scheme, for overseas Pakistanis permanently relocating home.4Federal Board of Revenue. Procedure for Import of Vehicles Under the Personal Baggage, Gift, and Transfer of Residence Schemes
The importer must show at least 850 cumulative days of physical presence abroad over the preceding three years, verified through passport stamps, visa records, and residency cards. Anyone who has already imported, gifted, or received a vehicle within the previous two years cannot use either scheme again, and an imported vehicle cannot be sold or transferred for one year after clearance. Under the personal schemes, used cars generally cannot be older than three years from the date of manufacture, measured from the chassis production date to the Bill of Lading date.
A separate commercial import window for 2025–2026 temporarily permits vehicles up to five years old at a 40% customs duty, but it operates under different rules and is aimed at authorized dealers rather than individual importers.
Penalties for Understating Engine Size or Value
Since the tax owed turns on engine displacement and declared value, misstating either is treated seriously. Sections 32 and 32A of the Customs Act of 1969 address false statements and fiscal fraud, and penalties include fines, seizure of the vehicle, and criminal prosecution. Customs officials cross-check declared engine numbers against manufacturer databases, so discrepancies surface quickly, and a seized vehicle may not be returned even after fines are paid.