Imported SUVs, cars and other specified motor vehicles will face an additional federal excise duty from Tax Year 2027.

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed a special excise duty on imported SUVs, cars and other motor vehicles for Tax Year 2027 under amendments introduced through the Finance Act, 2026.

The FBR explained the major changes to the Federal Excise Act, 2005 (FEA) through Federal Excise Circular No. 1 of 2026, issued following the enactment of the Finance Act, 2026.

According to the FBR, a new sub-section (3B) of Section 3 of the Federal Excise Act has been inserted to impose special excise duty on specified goods listed in the newly introduced Table-1A of the First Schedule.

The special excise duty will be charged at the rates prescribed against the relevant goods in the new table.

Imported cars and SUVs brought under special duty

The FBR said imported cars, SUVs and other motor vehicles have currently been included in Table-1A and will therefore fall within the scope of the newly introduced special excise duty.

The amendment also gives the FBR Board powers to prescribe the time, mechanism, procedure, mode and manner of collection of the special excise duty.

The FBR clarified that the special excise duty imposed under the newly inserted sub-section will be in addition to the excise duty already chargeable under sub-section (1) of Section 3 of the Federal Excise Act.

This effectively creates an additional federal excise duty layer for specified imported vehicles, including SUVs and cars, from Tax Year 2027.

Additional tax burden on imported vehicles

The inclusion of imported vehicles in the new Table-1A forms part of the taxation measures introduced through the Finance Act, 2026 to generate additional revenue from selected goods and broaden the scope of federal taxation.

The measure means importers and other businesses dealing in affected vehicles will need to account for the additional special excise duty alongside existing applicable duties and taxes.

The new levy is expected to increase the overall tax burden associated with specified imported vehicles, depending on the rates prescribed for each category under Table-1A.

Importers will also need to comply with the collection and payment procedures to be prescribed by the FBR for implementation of the special excise duty.