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To reshape the automotive industry, the Government of Pakistan, under the Finance Act 2025, has drastically changed its policy on vehicle imports. The radical reforms in import duty on vehicles, particularly luxury SUVs and sedan cars, are geared not only towards making luxury cars more affordable to the masses, but they also aim at encouraging formal imports and discouraging smuggling. Industry professionals and consumers are rejoicing at such policy revisions, which come into effect on July 1, 2025.

As an automobile enthusiast, a dealer, or simply someone planning to import cars in Pakistan, it will be important to know what these changes will imply. This SpotMV article gives an in-depth coverage with details on how a car import duty calculator can be used, as well as how the import duties are reduced.

Significant Cuts in Car Import Tariffs (2025)

According to the Finance Act 2025, there are a number of significant import duty reductions, which precisely focus on the segments of premium and luxury vehicles. Now, let us see the most remarkable decreases:

1. Regulatory Duty (RD) of Cars Over 1800cc

The biggest one is a 40 per cent decrease of the Regulatory Duty on cars, having engines over 1800cc. This includes high-end sedans and luxury SUVs, with such popular models as:

• Toyota LC 300 LC 200

• Lexus LX570 LX600

The taxation that these vehicles had to bear has been reduced to a great extent, and hence, these cars are much more affordable to the Pakistani customers.

2. Cut in Additional Customs Duty (ACD)

The Additional Customs Duty across the board has been reduced by 1 to 2 per cent, as all imported vehicles are at 6 per cent. This decrease, as minimal as it might sound, has massive effects on the price when it is incorporated into total taxes and duties.

3. Overall Revised Incidence of Duties

There is also the overall tax incidence, which comprises the Customs Duty, the Regulatory Duty, and other levies that have also been minimized on different categories of vehicles. The biggest falls have concerned luxury cars and SUVs.

Comparative Analysis: The Structure of the Duty in 2024 and 2025

So, how does this change translate into real figures, and what does it mean to the various types of vehicles?

Non-Hybrid Vehicles (2024- 2025)

1. 1301–1500cc:

• 2024: 174%
• 2025: 165%

Reduction: 5.17 percent

2. 1501-1800cc:

• 2024: 197%
• 2025: 188%

Reduction: 4.57 

3. 1801–3000cc:

• 2024: 429%
• 2025: 361%

Reduction: 15.85 % 

4. Above 3000cc:

• 2024: 470%
• 2025: 401%

Reduction: 14.68

Commercial Vehicles (e.g., vans, pickups, coasters):

Small changes of 0.86-6.15 per cent reduction in duties.

Observation

There have been the largest reductions on the luxury classes (1800cc and upwards), which has been strategic in terms of policy. The government appears very interested in making formal imports more appealing, suppressing smuggling incentives, and facilitating a smooth vehicle registration process within the formal economy.

Duty Calculation Car In Pakistan (2025 Edition)

When thinking of importing a vehicle, one should know how to calculate the cost of a complete import. Although it is faster to use a car import duty calculator, the following would be an easier-to-follow breakdown:

• The CIF (Cost, Insurance, and Freight) value of the vehicle should be deemed.
• Impose Customs Duty on the basis of the capacity of the engine and the type of vehicles.

Include Regulatory Duty (RD) and Additional Customs Duty (ACD)

• RD: Between 10-40 per cent according to the vehicle type.
• ACD: This is now standardizing around 6%.

Add other imposts, including:

• Sales Tax 17%
• Federal Excise Duty (depends on the size of the engine)
• Withholding tax (WHT)

The calculator of car import duty can help to save time and prevent manual mistakes usage of the updated calculator.

Effects on the Consumers and the Auto Industry

The following are the effects on the consumers and the auto industry of the reduced duties on imported cars:

1. Buyers' Price Relief

The overall duties imposed have now seen luxury imported cars, whose prices were really skyrocketed, fetch an affordable cost. As an example, a Land Cruiser LC300 has reduced in price by a few million rupees, based on the type of year and version.

2. Increment in Formal Automobile Imports

Too much tax just made many consumers use grey channels or import used cars. Legal imports are now more feasible with these new duties, and consumers are seeing more protection and transparency, as well as good revenue to the government.

3. Decrease in Smuggling

This was encouraged by high import duty, which had facilitated smuggling and abuse of diplomatic exemptions. There is also less strong temptation to smuggle since the rates on duties have become more realistic. This helps in making the auto market more responsible and formalized.

Grand Scheme: Economic and Policy Plan

It is not merely a change in tax policy; it is an economic reform that is in line with the prescriptions of international organizations such as the IMF and the World Bank. The aims are:

1. Auto liberalization

2. The lowering of trade barriers because a gradual process.

3. Making customs more straightforward

4. Gradual application of the excessive customs and regulatory duties

Another government agenda supported by this reform is to modernize the import process, enhance competition, and reduce costs to the consumer without sacrificing revenue.

Its Implications on Future Imports

The 2025 policy may lead to a long-term change. Such is what to expect:

• An increase in the number of brands in the market because of the competitive price

• Expanded consumer opportunities, and some of them are in the SUV and hybrid market segments

• A modern import procedure that can be supported by digital channels and AI-based importers' incorporation of duty calculators

Conclusion

The Finance Act 2025 is a breakthrough in the auto import business of Pakistan. The government has lowered regulatory and customs tariffs, especially on luxury cars, leading to the opening up of the industry to wider entry, decreased smuggling, and formalization of the auto industry.

It is a strategic moment when individuals would wish to import cars into Pakistan. The large-scale changes being implemented are beneficial to both dealers and consumers, as one can sort out all the details, including the means of calculating car duty in Pakistan, better by using such calculators as the car import duty calculator.

Stay up to date with SpotMV with so much more to be said on the implications of such changes on the wider vehicle market in Pakistan, modules, and analysis!