ISLAMABAD: The federal government, under Prime Minister Shehbaz Sharif, has approved a policy change allowing the commercial import of used vehicles up to five years old — an increase from the previous limit of three years — effective from September 1.
The decision was announced during a meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla. Secretary Commerce Jawad Paul clarified that while the Baggage Scheme for overseas Pakistanis remains unchanged — allowing the import of vehicles up to three years old — commercial importers will now be permitted to bring in five-year-old vehicles from September.
To manage the impact on the local auto industry, the government will impose an additional tariff protection of 40% in fiscal year 2025–26. The revised total tariff will be capped at 50%, down from the previous average of 90%. This additional tariff will be gradually phased out over four years.
The government also plans to eventually allow the import of six- to seven-year-old vehicles, with strict controls on quality and emissions to avoid environmental degradation.
Senator Mandviwalla recommended that overseas Pakistanis under the Baggage Scheme should receive the same five-year limit as commercial importers, advocating for parity in treatment.
Commerce Secretary Paul also noted that the “gift scheme” for vehicle imports has been subject to misuse and may undergo reform.
Meanwhile, the National Assembly’s Standing Committee on Finance, chaired by Syed Naveed Qamar, approved several significant fiscal measures. Among them was the decision to bring pensions exceeding Rs10 million into the tax net at a rate of 5%.
The committee also endorsed amendments to the Income Tax Ordinance’s Seventh Schedule, aimed at the banking sector. These include restrictions on the deduction of certain expenses such as rent on bank-owned properties and provisions for non-performing loans.
Additionally, plans were discussed to boost local electric vehicle (EV) production to 2.2 million units — primarily electric motorcycles — over the next five years.
In a related development, the committee was surprised to learn that a proposed three-tier levy on new automobile purchases had been omitted from the Finance Bill 2025–26. The structure included:
- 1% levy on vehicles up to 1300cc
- 2% on vehicles between 1301cc and 1800cc
- 3% on vehicles exceeding 1800cc
Committee members expressed concern over the omission and urged the government to ensure all proposed fiscal measures are transparently incorporated in the final budget.
