The federal government has relaxed restrictions on the import of used vehicles, allowing commercial imports of cars up to five years old, compared to the previous three-year limit. However, under the Baggage Scheme, overseas Pakistanis can still import three-year-old vehicles. The decision was confirmed during a Senate Standing Committee on Finance meeting, where Commerce Secretary Jawad Paul clarified that the new policy would take effect from September 1. To protect local manufacturers, an additional 40% tariff will be imposed in FY25, capping duties at 50%—down from the previous average of 90%.
The government plans to gradually eliminate the 40% additional tariff over the next four years, eventually allowing even 6-7-year-old vehicles into the market. Senator Saleem Mandviwalla argued that the same five-year limit should apply to the Baggage Scheme, ensuring equal treatment for overseas Pakistanis and commercial importers. Meanwhile, concerns were raised about the misuse of the gift scheme for importing old vehicles. Authorities assured that quality and environmental standards would be enforced to prevent pollution risks from aging cars.
In a separate development, the National Assembly’s Finance Committee approved bringing pensions exceeding Rs10 million into the 5% tax net. The panel also endorsed amendments to the Income Tax Ordinance, targeting the banking sector. The FBR proposed five key changes, including disallowing tax exemptions on rented bank properties and bad loan provisions. These measures aim to increase revenue collection and ensure stricter compliance.
Pakistan is also focusing on electric vehicle (EV) production, with plans to manufacture 2.2 million units, primarily electric bikes, in the next five years. However, confusion arose when the NA Finance Committee discovered that a proposed three-tier tax (1-3%) on new car purchases—based on engine size—was excluded from the Finance Bill 2025-26. Lawmakers expressed surprise, questioning whether the policy would still be implemented. These developments highlight the government’s efforts to balance trade policies, tax reforms, and green energy initiatives.