KARACHI –
The Federal Board of Revenue (FBR) has announced a significant hike in import tariffs, imposing a 40% Regulatory Duty (RD) on the commercial import of old and used vehicles. This move, finalized through a notification issued on Wednesday, signals a major policy shift aimed at regulating the inflow of used cars.
The duty specifically targets vehicles—including passenger cars, buses, trucks, and motorbikes—falling under PCT headings 8702, 8703, 8704, and 8711 of the Customs Act, 1969, when imported commercially under the Import Policy Order, 2022. The FBR clarified that this levy is in addition to existing regulatory duties already in force.
Cabinet Approves Scheme for Under-Five-Year-Old Vehicles
The decision follows an approval by the Economic Coordination Committee (ECC) of the Cabinet, presided over by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, on September 18, 2025. The Ministry of Commerce subsequently issued an SRO, allowing the commercial import of vehicles less than five years old with the immediate application of the 40% additional duty.
According to the Commerce Ministry’s SRO issued on September 30, 2025, the amendment to the Import Policy Order allows for the commercial import of used vehicles (PCT headings 8702, 8703, 8704, and 8711) that are less than five years old. This age restriction is temporary, set to expire on June 30, 2026, after which the age limit may be removed.
Furthermore, this commercial importation is strictly contingent on adherence to environmental, safety, and quality standards, including required testing and certification procedures prescribed by the Engineering Development Board (EDB) under the Ministry of Industries and Production.
Phased Reduction of Duty Rate
The 40% Regulatory Duty, applied over and above existing customs duties, is scheduled to remain in effect until June 30, 2026. The government has also laid out a clear path for its gradual removal: the duty will be reduced by 10 percentage points per year thereafter, completely phasing out by the fiscal year 2029-30, aligning with the recommendations of the Tariff Policy Board.
