Detailed Breakdown of New Taxes on Luxury Cars and EVs
The FY2026-27 budget keeps CKD EV kit imports exempt until June 30, 2027, but raises taxes on expensive EVs and large-engine vehicles.
Intelligence analysis by GPT-5.4 Mini
Pakistan’s budget proposal pairs support for EV assembly with higher taxes on imported luxury EVs and big petrol vehicles. The draft would keep some EV imports duty-free while making high-end models more expensive.
Pakistan is changing car taxes like putting bigger price tags on the fanciest cars. Cheaper EV parts can still come in without extra tax, but very expensive electric cars and big petrol cars will cost more.
Analysis
The article says the federal government’s FY2026-27 budget proposal combines incentives for electric vehicles with new taxes on luxury imports. On the support side, the exemption on importing completely knocked down (CKD) kits for EVs is proposed to continue until June 30, 2027. That matters because CKD kits are commonly used for local assembly, so the policy could still support domestic EV production.
At the same time, the budget would keep imported EVs for personal use in completely built-up (CBU) condition duty-free only up to Rs. 20 million. Imported EVs priced above Rs. 20 million and up to Rs. 30 million would face a 30 percent duty. EVs valued above Rs. 30 million would be charged 40 percent duty.
The proposal also targets larger imported vehicles powered by internal combustion engines. According to the budget documents cited in the article, cars, SUVs, and other vehicles with engine capacities above 2000cc and up to 3000cc would face a 40 percent ad valorem Federal Excise Duty (FED). Vehicles with engine capacities above 3000cc would be charged a 41 percent ad valorem FED.
The overall direction is clear: the government appears to be protecting lower-cost or locally assembled EV activity while making premium imports more expensive. The article frames this as part of the broader FY2026-27 budget changes affecting luxury cars and EVs.
Key points
- The government proposes extending the CKD kit import exemption for EVs until June 30, 2027.
- Imported personal-use EVs up to Rs. 20 million would remain duty-free under the proposal.
- EVs priced above Rs. 20 million and up to Rs. 30 million would face a 30 percent duty.
- EVs above Rs. 30 million would face a 40 percent duty.
- Imported vehicles with engine sizes above 2000cc would face a 40 percent FED, and those above 3000cc would face 41 percent.
If the proposal is implemented as written, EV assembly could still benefit from the CKD exemption through June 2027. That may help keep some investment and local production moving while leaving lower-priced EVs more accessible than luxury imports.
The new duties could make premium EVs and large vehicles noticeably more expensive for buyers. That may slow sales of higher-end imports and raise the overall cost of choosing a luxury EV or a big engine car.
