Auto industry tax relief is expected in Pakistan’s federal budget for fiscal year 2026-27 as the government considers reducing taxes on raw materials used in locally manufactured vehicles. The proposed measures are aimed at supporting the local auto sector and encouraging investment in energy-efficient vehicle production.
According to reports, authorities are considering keeping the national average tariff below 6 percent for locally produced vehicles. The proposals are expected to become part of the new budget and upcoming auto policy from July 1.
🚗 Government Considers Tax Reduction for Auto Sector
The government is reportedly preparing several proposals to support Pakistan’s local automobile industry in the upcoming federal budget.
Officials are considering reducing taxes and customs duties on raw materials used in the production of locally assembled vehicles. The move is intended to lower manufacturing costs and improve competitiveness in the domestic auto market.
📉 Proposal Suggests Lower National Average Tariff
Sources stated that a proposal has been prepared to keep the national average tariff for locally manufactured vehicles below 6 percent.
The proposal is part of broader efforts to strengthen local vehicle production and reduce reliance on imported fully assembled vehicles. Authorities believe the policy could support long-term industrial growth and investment.
⚡ Electric Vehicle Policy May Expand
Reports also suggested that the Electric Vehicle (EV) policy could be expanded to cover all new energy vehicles.
The proposed framework may include electric vehicles, plug-in hybrid vehicles, and fuel cell vehicles under a concessional tariff structure. The policy aims to encourage cleaner transportation technologies and support sustainable mobility solutions.
🏭 Local Auto Industry May Receive Preferential Protection
The government is also considering preferential protection measures for locally assembled electric vehicles against imported and completely built-up vehicles.
Industry experts believe such measures may encourage local assembly operations and improve domestic manufacturing capacity in Pakistan’s automobile sector.
📦 Customs Duty Relief Proposed Until 2028
According to sources, concessional customs duties on CKD (Completely Knocked Down) parts may remain effective until June 30, 2028.
The proposal is intended to support local assemblers by maintaining lower import costs for vehicle components used in domestic production facilities.
📊 Additional Customs and Regulatory Duties May Decrease
The proposed National Tariff Policy also includes plans to eliminate additional customs duties and reduce regulatory duties on selected imports related to the auto industry.
Officials are reviewing different options to gradually shift the auto sector incentive system toward a more normalized economic regime over time.
🔧 Auto Sector Reforms Linked to Long-Term Growth
The latest proposals are part of wider government efforts to modernize Pakistan’s automobile industry and support future investment opportunities.
Authorities believe reduced tariffs, EV incentives, and updated industrial policies could help improve production efficiency, increase competition, and support long-term sector growth.