Govt imposes excise duty on imported vehicles, luxury SUVs in budget measures

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Friday announced the imposition of a Federal Excise Duty (FED) on imported vehicles as part of the government’s new fiscal measures unveiled in the federal budget.

Presenting the budget, the finance minister said the new duty will also apply to sport utility vehicles (SUVs) with engine capacities ranging from 2,000cc to 3,000cc.

He further announced an increase in excise duty on vehicles with engine capacities exceeding 3,000cc, while a new duty has also been proposed on electric vehicles valued above Rs20 million.

Aurangzeb said the government is reviewing a new automobile policy through a committee constituted by the prime minister to assess future reforms in the sector.

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Despite the new taxation measures, the finance minister said the government would continue existing tax incentives for electric motorcycles, rickshaws and buses in an effort to encourage environmentally friendly transport.

He added that a reduced sales tax rate of one per cent has been proposed for imported electric trucks to support the transition towards cleaner commercial transportation.

In another significant measure, Aurangzeb announced the abolition of the Federal Excise Duty on business class international air travel, providing relief to passengers travelling abroad.

The announcements form part of the government’s broader fiscal strategy aimed at increasing revenue generation while promoting the adoption of electric and sustainable transport solutions.