Pakistan is reportedly considering a major policy shift by extending the age limit for the import of old and used cars from the current three years to five years.
This proposal is expected to be part of the upcoming federal budget for the fiscal year 2025–26, according to various media sources.
Currently, Pakistan allows the import of used cars up to three years old and sport utility vehicles (SUVs) up to five years old under specific schemes. The proposed revision seeks to standardize the age limit to five years for all categories of vehicles, including passenger cars, potentially expanding the options available to consumers in Pakistan’s auto market.
The government had earlier introduced a 15% regulatory duty in the 2024–25 budget on used imported cars exceeding 1,300cc, which impacted prices and import volumes. In addition to revising the age limit, Pakistan is also reviewing tariff structures on Completely Built-Up (CBU) vehicles. There are discussions around reducing tariffs to below 10%, with a long-term goal of bringing overall auto-sector tariffs down to single digits over the next five years.
To ensure proper regulation, the Federal Board of Revenue (FBR) has implemented various controls to prevent the misuse of used car import schemes. In the past, avenues like the personal baggage scheme, transfer of residence, and gift scheme were frequently exploited. Under the current Import Policy Order (IPO) 2022, only overseas Pakistanis who have not imported, gifted, or received a vehicle in the past two years are eligible to use these schemes.
The FBR has also clarified taxation rules regarding the auction of used cars. Serviceable used vehicles will not be subject to an additional 18% sales tax if the tax has already been paid at import or local purchase. However, condemned or unserviceable cars will still be taxed at auction regardless of prior payments.
If approved, this policy change could significantly benefit car buyers in Pakistan by offering more affordable and diverse options in the used cars market.