The Finance Act 2026 has officially passed and received approval. Consequently, several major auto-sector tax changes will become official starting tomorrow, July 1, 2026. Previously, lawmakers debated these measures under the Finance Bill 2026-27. Now, the bill is law, and the revised duties apply immediately under the Finance Act 2026. Additionally, the industry expects the release of the upcoming Auto Policy 2026–31 very soon.
Customs Duties Slashed on Imported Cars in Finance Act 2026
The new law significantly reduces customs duties across various engine categories for imported vehicles. Here is the newly approved FY2026-27 structure:
| Category | Customs Duty | Regulatory Duty | Add. Customs Duty | FED / SED |
|---|---|---|---|---|
| Up to 800cc | 30% | 0% | 0% | 2.5% |
| 801-1000cc | 35% | 0% | 0% | 2.5% |
| 1001-1300cc | 40% | 0% | 0% | 5% |
| 1301-1500cc | 40% | 10% | 4% | 10% |
| 1501-1600cc | 45% | 10% | 4% | 10% |
| 1601-1800cc | 45% | 10% | 4% | 10% |
| 1801-2000cc | 50% | 20% | 4% | 30% |
| 2001-3000cc | 50% | 20% | 4% | 116% |
These reduced duties mean lower estimated prices for specific CBU vehicles. For example, 1300-1500cc models like the Axio Hybrid EX 2023 will drop by an estimated 8.5 Lacs, while the Sienta Hybrid G 2023 will decrease by 10 Lacs. Furthermore, 1800-2000cc models like the 2023 BMW 520i 2.0L will see massive estimated decreases of up to 1.6 Crore.
Special Excise Duty Hits Bigger Engines
However, the government will not spare larger vehicles. Imported petrol cars and SUVs exceeding 2,000cc now face a hefty Special Excise Duty. Therefore, this aggressive new tax offsets the benefits of the lower customs duties.
| Vehicle Category | Special Excise Duty |
|---|---|
| Imported petrol cars and SUVs (2,000cc to 3,000cc) | 86% |
| Imported petrol cars and SUVs (Above 3,000cc) | 92% |
Consequently, prices for vehicles above 2000cc will increase sharply. Expect a 20 Lac increase for a Parado TXL 2021. Similarly, a massive 1 Crore hike hits the LX 600 2022.
New Levies on Luxury EVs & Islamabad Tokens
Meanwhile, imported electric vehicles face a harsh new reality. Luxury EVs lose their fully protected tax status under the new FED structure. EVs valued under $75,000 stay exempt. However, those valued between $75,000 and $110,000 face a 30% FED, and anything above $110,000 incurs a 40% FED. Ultimately, models like the BMW i7 xDRIVE 60 2026 will skyrocket by an estimated 1.3 Crore.
Finally, the act confirms a significant shift for Islamabad vehicle registrations. Authorities scrapped the fixed engine-capacity token tax for most categories. Now, owners must pay an invoice-value-based percentage. Vehicles up to 1,000cc retain a fixed Rs. 20,000 fee. However, vehicles from 1,001cc to 2,000cc will pay 0.25% of the invoice value, while those above 2,000cc will pay 0.35%.
