The federal government expects to collect Rs. 188.58 billion over five years through a new Automotive Development Levy on locally assembled and manufactured vehicles under the draft Auto Policy 2026-31 approved by Prime Minister Shehbaz Sharif.

According to the policy document, the government has projected levy collections of Rs. 37.71 billion in fiscal year 2026-27, increasing to Rs. 38.46 billion in 2027-28.

Collections are estimated at Rs. 38.29 billion in 2028-29, Rs. 37.30 billion in 2029-30 and Rs. 36.83 billion in 2030-31.

The proposed levy rates vary by vehicle category and engine capacity. Cars with engines below 1,000cc would face a zero rate, while vehicles between 1,001cc and 2,000cc would be subject to a 2 percent levy. Cars above 2,000cc would face a proposed rate of 10 percent.

The rates would apply to internal combustion engine vehicles, including imported and locally assembled or manufactured models.

Two-wheelers, three-wheelers and agricultural tractors would be exempt from the levy. Trucks and light commercial vehicles, buses and vans, and specified prime movers would be subject to a 2 percent rate.

The government’s annual revenue estimates remain within a relatively narrow range throughout the five-year period, with projected collections from locally assembled and manufactured vehicles varying between Rs. 36.83 billion and Rs. 38.46 billion.

The draft policy also includes separate revenue projections for the levy on imported vehicles.

Actual collections would depend on the final policy provisions, the method used to calculate the levy and the number and types of vehicles sold or imported during the relevant fiscal years.