ISLAMABAD – Car prices continue to rise in Pakistan as sales improve amid dip in policy rate and inflation, but latest numbers reveal shocking disparities in tax rates between locally made cars and imported vehicles.
As Pakistani government is tapping every possible sector to rake in taxes, the brand-new Green Levy Tax on petrol and diesel vehicles will also make difference. Whether you drive locally made car or import your ride, get ready to pay more, just for owning an internal combustion engine (ICE) vehicle.
Taxes on Cars in Pakistan 2025
Car tax structure in Pakistan is based on engine size. For small cars with engines under 1300cc, a uniform tax rate of 1% applies to both local and imported vehicles, making them more affordable and equally treated.
| Category | Engine | Locally Made Cars | Imported Cars |
|---|---|---|---|
| Small Cars | Under 1300cc | 1% | 1% |
| Mid-Size Cars | 1300cc – 1800cc | 2% | 2% |
| Large Cars | Above 1800cc | 3% | 3% |
| Fuel Buses & Trucks | All sizes | 3% | 1% |
(All charges include duties and taxes)
Mid-size cars with engine capacities between 1300cc and 1800cc are taxed at 2%, again with no distinction between local and imported options. Large cars with engines above 1800cc face the highest tax rate of 3%, regardless of origin, likely as a measure to discourage the use of gas-guzzling vehicles.
Locally made vehicles are taxed at 3pc, while imported ones benefit from lower tax rate of 1pc, suggesting policy aimed at encouraging the import of more modern or fuel-efficient commercial vehicles, possibly due to limited domestic production capabilities in that segment. Ask ChatGPT
This new tax strategy is part of national campaign to phase out fuel-powered vehicles and replace them with electric alternatives. The message from FBR is loud and clear:
With financial tweaks, EVs might just become the smarter and cheaper option for Pakistani buyers. The new policy aims to cut pollution, slash fuel imports, and drive the country toward a cleaner future. Manufacturers, importers, and dealers are scrambling to respond. “This is a massive disruption,” said one major car importer. “Buyers will think twice before purchasing a petrol vehicle now.”
Tax Update on 1300cc, 1500cc, and 1800cc Cars in Pakistan After Budget 2025-26
