ISLAMABAD – The government has decided to impose Federal Excise Duty (FED) on imported vehicles as part of the Budget 2026-27 proposals.
During his budget speech, Finance Minister Muhammad Aurangzeb announced that SUVs with engine capacities ranging from 2,000cc to 3,000cc would also be subject to Federal Excise Duty.
He further stated that the FED on vehicles with engine capacities exceeding 3,000cc is being increased. The government has also proposed imposing Federal Excise Duty on electric vehicles priced above Rs20 million.
The finance minister said that a new auto policy is currently under review by a committee constituted by Prime Minister Shehbaz Sharif.
According to Aurangzeb, the existing incentives for electric motorcycles, rickshaws, and buses will remain in place. He also proposed a one percent sales tax concession on imported electric trucks to encourage the adoption of clean transportation.
In addition, the finance minister announced that the Federal Excise Duty on overseas business-class air travel has been abolished.
