The federal government has dealt a significant blow to the commercial import of used vehicles by imposing a steep 40 percent additional regulatory duty, a move set to substantially increase the price of second-hand automobiles for consumers. The Federal Board of Revenue (FBR) has officially notified the decision following its approval by the federal cabinet.

According to the official notification, this new tariff will be applied on top of all existing taxes. The 40 percent levy is slated to remain in effect until June 30, 2026. Following this period, the government plans a gradual phase-out, reducing the duty by 10 percent annually starting from July 2026, with the aim of completely eliminating the additional tax by June 30, 2029.

This new financial measure comes as the government has already permitted the commercial importation of pre-owned vehicles. The Ministry of Commerce issued a separate notification green-lighting these imports, which will initially be restricted to automobiles less than five years old until the end of the 2026 fiscal year. After this date, the age limitation on imported cars will be lifted.

To accommodate this policy shift, necessary amendments have been incorporated into the Import Policy Order 2022. The permission to bring in these vehicles is strictly conditional upon their compliance with established environmental and safety standards, ensuring that imported automobiles meet national regulations.

The decision to introduce the substantial duty follows a recent approval by the Economic Coordination Committee (ECC). The committee had endorsed the proposal for the commercial import of used vehicles during its meeting on September 24, 2025.