The proposed 10% car levy in Pakistan would apply to vehicles above 2,000cc. Cars up to 1,000cc are shown at zero, and everything between 1,001cc and 2,000cc at 2 per cent. It is a draft, not law, and nothing is being charged yet.
That distinction matters, because a headline rate of 10 per cent tells most buyers in this country the wrong thing. Almost every locally assembled car sold here sits in the zero or two per cent band.
What Is the Proposed 10% Car Levy in Pakistan?
It is a proposed Automotive Development Levy, charged on vehicles by engine capacity, reported from the draft Auto Policy 2026–31 presentation. The stated purpose is to fund export promotion and automotive development.
It has not been enacted. No gazette notification exists, no effective date has been set and no taxable base has been published.
For the wider policy it belongs to, see our latest Pakistan Auto Policy 2026–31 update, which covers the approval process and the duty changes rather than this levy.
Proposed Car Levy Rates by Engine Capacity
The bands reported from the draft presentation are the same for locally produced and imported cars, SUVs, jeeps and double cabins.
| Engine capacity | Proposed levy | Typical vehicles here |
|---|---|---|
| Up to 1,000cc | 0% | 660cc and 1,000cc hatchbacks |
| 1,001 to 1,300cc | 2% | Small sedans and hatchbacks |
| 1,301 to 2,000cc | 2% | Most sedans and crossovers |
| 2,001 to 3,000cc | 10% | Large SUVs, double-cab pickups |
| Above 3,000cc | 10% | Mostly imports |
Proposed rates reported from the draft policy presentation and not confirmed as law. Prime movers, buses and trucks are reported separately at 2 per cent. The vehicle column is our own illustration by capacity, not part of the draft.
Two details in that table are worth pausing on. The first is the boundary wording: some reporting writes the lowest bands as “up to 1,000cc” and then “1,000cc to 1,300cc”, which would place a car at exactly 1,000cc in both.
That is not a quibble here. Several of the country's highest-volume hatchbacks displace 998cc, one or two cubic centimetres under the line, so a drafting slip is the difference between zero and two per cent on the cars most people buy.
The second is that 1,001–1,300cc and 1,301–2,000cc carry the same 2 per cent rate. As a schedule that is redundant, since one band would do. Separate bands at an identical rate usually mean the structure is inherited, or that the rates are expected to diverge later. Worth watching in the first budget after any notification.
How Is This Different From the Levy Already in Force?
This is where most coverage blurs. A vehicle levy already exists and is being collected, and it is a different thing with different bands.
It is the New Energy Vehicles Adoption Levy, created by its own Act in 2025 and imposed under Section 3, with rates set out in a First Schedule. It charges internal-combustion vehicles to fund the shift to electric ones.
| NEV Adoption Levy | Proposed Development Levy | |
|---|---|---|
| Status | In force | Draft only |
| Band breaks | 1,300cc and 1,800cc | 1,000, 1,300, 2,000, 3,000cc |
| Rates | 1%, 2%, 3% | 0%, 2%, 10% |
| Buses and trucks | 1% | 2% reported |
| Charged on | Invoice price or assessed value, inclusive of duties and taxes | Not published |
| Purpose | Electric vehicle adoption | Exports and development |
The levy in force is paid by the manufacturer on locally assembled vehicles and by the importer on imported ones.
Look at the band breaks and the problem appears immediately. The 1,800cc line exists in one schedule and not the other, so you cannot read across from one to the other.
A 1.8-litre Corolla Altis sits in the top band of the levy in force, at 3 per cent, and in a middle band of the proposed one, at 2 per cent. A 2,000cc crossover is above 1,800cc for one and at the top of the 1,301–2,000cc band for the other. Same car, two different positions.
The Question Nobody Has Answered Yet
Does the proposed levy replace the one already being charged, or sit on top of it? Nothing published answers that, and it changes the outcome more than any other detail.
If it is additional, a vehicle above 2,000cc would face 3 per cent under the existing levy and 10 per cent under the new one. That is thirteen per cent in levies alone, before customs duty, sales tax, federal excise and withholding tax.
If it replaces the existing levy, the figure is 10 per cent, and the increase at the top is seven percentage points rather than ten. Until the schedule is gazetted, both readings are open, and anyone telling you which one applies is guessing.
Which Cars and SUVs Could Be Affected?
Take the bands one at a time, with vehicles whose engine capacity comes from the manufacturer rather than from a spec aggregator.
Zero band. Suzuki's own launch release for the Alto built here by Pak Suzuki gives the engine as 660cc. Nothing to pay at that size under the draft, and 998cc hatchbacks are just inside the line too.
Two per cent band. This is where the bulk of the market lives: small sedans and hatchbacks from 1,001cc, then the 1.3 to 2.0-litre sedans and crossovers that make up most showroom traffic, a 1.6 or 1.8-litre Corolla among them.
Ten per cent band. Indus Motor Company's own official Fortuner Legender announcement describes a 2.8-litre 1GD turbo-diesel. At 2,755cc that is inside the 2,001–3,000cc band wherever the final digit falls.
Above 3,000cc is mostly imports, and double-cab pickups land in the 10 per cent band alongside the big SUVs, which matters for anyone running one as a working vehicle rather than a lifestyle purchase.
Will the New Car Levy Increase Prices in Pakistan?
A levy charged on a vehicle's value raises its cost, so the direction is not in doubt. The size is, and we are not going to put a rupee figure on any model.
The reason is the taxable base. The levy in force is calculated on invoice price or assessed value inclusive of duties and taxes, which is not the retail price, and the proposed levy's base has not been published at all.
What can be said is the arithmetic. Ad valorem means per Rs 1,000,000 of whatever taxable value is eventually defined, 2 per cent is Rs 20,000 and 10 per cent is Rs 100,000 — useful for scale, useless as a price prediction until the base is known.
Policy also moves in both directions at once. Our coverage of the proposed removal of federal excise duty from 1,000cc cars sits alongside this levy's zero band, and what the policy could do to Toyota Yaris prices shows how little a headline rate tells you on its own.
Why Is the Government Proposing the Levy?
Revenue with a purpose attached. Proceeds have been reported as going to export promotion and automotive research and development, which is also where the levy's name comes from.
The shape of the bands fits the political brief too. A senior Prime Minister's Office official, briefing in September 2026, gave the Prime Minister's first guideline for the policy as prioritising the financial protection of ordinary citizens buying small cars.
A zero band up to 1,000cc and 10 per cent above 2,000cc does exactly that: it loads the charge onto larger vehicles and imports while leaving the entry market untouched. The zero band is not an accident.
When Could the Proposed Car Levy Take Effect?
No date has been set, and the policy itself is not finished. The approval story is worth reading carefully, because it has been reported in two contradictory ways one day apart.
On 10 September 2026 it was reported that the Prime Minister had green-lighted the policy, described as an in-principle approval, with the Economic Coordination Committee, the Cabinet and the IMF still to come.
On 11 September 2026 a senior Prime Minister's Office official said the policy was still being finalised and not approved, contrary to media reports, with a formal written draft still being prepared.
Both accounts support the same conclusion: nothing has been enacted.
The figures have moved once already. Earlier reporting described a levy at 10 per cent for 2,001–3,000cc and 19.5 per cent above 3,001cc, with revenue put at around Rs 142.79 billion over five years. The current draft's top band is 10 per cent.
Accessories for the Cars in Each Band
Whatever the schedule ends up saying, the car in your driveway is the car in your driveway. Our ranges are organised by model rather than by tax band, and each one is cut to that body.
There are dedicated collections for Suzuki Alto accessories, Toyota Corolla accessories in Pakistan and Toyota Fortuner accessories, fitted in-house in Multan with nationwide delivery. More on us is on our about page.
Final Thoughts
The new car levy in Pakistan is a draft schedule attached to a policy that has not been approved. Read as proposed, it exempts cars up to 1,000cc, charges 2 per cent from 1,001cc to 2,000cc, and 10 per cent above that.
Two things are worth keeping. The 10 per cent band begins at 2,001cc, so most buyers here are looking at zero or two per cent rather than ten.
And nobody has yet said whether this replaces the levy already being collected or stacks on it, which is the difference between 10 and 13 per cent at the top. Until the schedule is gazetted, the rest is reporting — more in our automotive news and car guides.
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