Islamabad (Commerce Desk) The government is considering reducing taxes on raw materials used for locally manufactured vehicles in the federal budget for the next fiscal year 2026-27.
According to sources, a proposal is under review to keep the National Average Tariff for locally produced vehicles below 6 percent.
Multiple measures are being included in the new budget and auto policy, which will come into effect from July 1, aimed at promoting the growth of the auto industry.
Under the proposed policy, it has been suggested to further expand the electric vehicle policy and extend it to all new energy vehicles. Electric vehicles, plug-in hybrid vehicles, and fuel cell vehicles are also being considered for inclusion in concessional tariff categories.
It is also proposed under the National Tariff Policy to eliminate additional customs duties and reduce regulatory duties.
Locally assembled electric vehicles may be given preferential protection compared to imported and fully built units.
Sources further said that concessional customs duty on CKD parts has been recommended to remain in place until June 30, 2028, while phasing out incentives for the auto sector into the regular tax regime is also under consideration.
