Pakistan’s proposed auto policy sets a 2 percent Automotive Development Levy on vehicles with engine capacities between 1,001cc and 2,000cc and a 10 percent rate on cars above 2,000cc.
The draft policy, approved by Prime Minister Shehbaz Sharif, proposes applying the levy to imported and locally assembled or manufactured internal combustion engine (ICE) vehicles.
Cars with engine capacities below 1,000cc would face no levy under the proposed rates. Two- and three-wheelers and agricultural tractors would also be exempt.
The proposed framework sets a 2 percent levy on several other vehicle categories, including trucks, light commercial vehicles (LCVs), buses, vans and prime movers, except those used for agriculture.
The proposed rates are outlined below:
| Vehicle category | Proposed levy |
|---|---|
| Two- and three-wheelers | 0% |
| Agricultural tractors | 0% |
| Cars below 1,000cc | 0% |
| Cars from 1,001cc to 2,000cc | 2% |
| Cars above 2,000cc | 10% |
| Trucks and LCVs | 2% |
| Buses and vans | 2% |
| Prime movers, excluding agricultural tractors | 2% |
The proposed levy structure applies different rates based on engine capacity and vehicle classification. Larger-engine cars would face a higher rate than vehicles with smaller engines, while several commercial vehicle categories would be subject to the 2 percent rate.
The actual effect on vehicle prices would depend on how the levy is calculated and the final implementation rules. The draft figures alone do not establish the additional amount buyers would pay for individual models.
The levy forms part of the government’s proposed automotive policy. Its final rates and implementation date would need to be confirmed through the applicable government notification.
