FBR may allow import of 5-year-old used vehicles

ISLAMABAD: The Federal Board of Revenue (FBR) is considering a proposal to allow import of up to five years old and used vehicles in the coming budget (2025-26) to promote competition in auto industry.

Sources told Business Recorder that the proposal is to extend the current age limit on imported used vehicles from three years to five years across the board.

Presently, the government allows the import of used cars up to 3 years old and SUVs up to 5 years under special schemes. The new policy may standardize the age limit to five years for all vehicle categories.

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In the last budget for 2024-25, a 15% RD was imposed on imported used cars exceeding 1,300cc.

The government is also examining the proposal to gradually phase out regulatory duties and slash tariffs on Completely Built-Up (CBU) vehicles to below 10 percent, with a broader goal of bringing auto-sector tariffs down to single digits within five years.

According to a tax expert, the FBR has already taken appropriate checks to control misuse of the import of old and used vehicles. The personnel baggage scheme, transfer of residence and gift scheme were reportedly misused on the import of old and used vehicles.

Under the law, the overseas Pakistanis are entitled to import vehicles under personnel baggage scheme, transfer of residence and gift scheme who have not imported, gifted or received a vehicle during the last two years under Import Policy Order (IPO), 2022.

The Board had clarified that customs department will not charge 18 percent sales tax on auction of serviceable old and used vehicles in case sales tax has been paid at the time of local or import stage. However, sales tax would be charged on auction of unserviceable/ condemned old and used vehicles from the bidders, irrespective of the fact that sales tax has already been paid on such imported or locally purchased vehicles, FBR added.

Copyright Business Recorder, 2025