Government to remove five-year age limit on used vehicle imports and gradually cut additional regulatory duty under tariff reforms.
ISLAMABAD: The federal government has decided to remove restrictions on the commercial import of used vehicles as part of the second phase of the National Tariff Policy (2025-30), aiming to liberalize trade and enhance competition in the automotive sector.
Federal Secretary for Commerce Jawad Paul informed the National Assembly Standing Committee on Finance on Saturday that the government would abolish the existing five-year age limit on commercially imported used vehicles during fiscal year 2026-27.
The move will be implemented under the second year of the National Tariff Policy and will be subject to compliance with quality and environmental standards.
He also announced that the additional Regulatory Duty (RD) imposed on commercial imports of used cars would be reduced from 40 percent to 30 percent in 2026-27. According to officials, the additional duty will be phased out completely over the following three years.
To ensure imported vehicles meet required safety and environmental benchmarks, the government plans to authorize selected Japanese inspection firms to conduct pre-shipment inspections before vehicles are shipped to Pakistan.
While briefing the committee on the Year-II budget exercise under the National Tariff Policy, the commerce secretary said the second phase of tariff reforms would result in an estimated revenue impact of Rs143.4 billion from July 1, 2026.
During 2025-26, reductions in customs duties, regulatory duties, and additional customs duties had already caused a revenue loss of Rs125 billion.
He stated that customs duty slabs are being rationalized, with most tariff categories capped at 50 percent. However, the existing 90 percent duty on alcoholic beverages will remain unchanged. Tariffs applicable to the automobile sector will be aligned with the upcoming Auto Policy 2026-2030.
The proposed reforms include reductions in customs duties, additional customs duties, regulatory duties, and exemptions under the Fifth Schedule. Thousands of tariff lines will be revised, while outdated exemption entries will be eliminated to lower the average tariff structure.
During the meeting, the committee stressed that tariff liberalization should be introduced gradually to protect domestic industries while improving competitiveness and boosting exports. Members emphasized that lower tariffs should ultimately reduce production costs and benefit consumers instead of merely favoring importers.
The committee recommended phased implementation of reforms, periodic impact reviews, and safeguards for strategic industries to support sustainable economic growth and protect national interests.
Separately, lawmakers reviewed proposed amendments to the Petroleum Products (Petroleum Levy) Ordinance, 1961, focusing on stricter action against defaulting Oil Marketing Companies (OMCs). The committee proposed immediate suspension of fuel supplies to OMCs that fail to deposit petroleum levies within 30 days and called for eliminating discretionary installment facilities to strengthen revenue collection.
