Understanding Car Taxes and Registration Fees for

Explore the key taxes and registration fees to consider when buying a new car in Pakistan, ensuring informed

Buying a new car in Pakistan involves various steps and costs beyond just the purchase price. One of the most significant aspects to consider is the taxes and registration fees, which can vary based on factors such as the car’s engine capacity, the region of registration, and the type of car. Understanding these costs is crucial for potential car buyers to avoid unexpected financial burdens. In this article, we will break down the key taxes and registration fees that car buyers in Pakistan should be aware of when purchasing a new vehicle.

1. Sales Tax

• General Sales Tax (GST): A standard 17% GST is levied on the car’s ex-factory price across Pakistan.
• Federal Excise Duty (FED): Imposed on cars over 1,000cc, ranging from 2.5% to 7.5%.

2. Registration Fees

Registration is managed by provincial excise and taxation departments:

• Fees vary by province. For instance, in Sindh, a 1,000cc car costs PKR 8,000–15,000, while in Punjab, the fee ranges from PKR 10,000–12,000.
• License plates cost an additional PKR 2,000–5,000.

3. Road Tax (Token Tax)

This annual tax depends on engine capacity:

• A 1,000cc car incurs PKR 5,000–10,000 annually, while a 1,500cc car may require PKR 10,000–15,000.
• Hybrid vehicles often enjoy lower rates.

4. Registration Document Fees

Buyers pay for essential documents like Registration Certificates and Fitness Certificates, costing PKR 1,000–3,000. The fitness certificate ensures roadworthiness.

5. Customs Duty for Imported Cars

• Customs duties are significant, ranging from 30% to 100%, based on engine size and car age.
• Additional taxes, including withholding tax and sales tax, further increase the total cost.

6. Luxury Cars

High-end vehicles face added costs:

• Luxury Tax: Up to 10% for cars over 2,000cc.
• Additional Excise Duty: Imposed on premium models.

7. Tax Exemptions

• Electric Vehicles (EVs): Benefit from tax exemptions to promote eco-friendly transport.
• Hybrid Cars: Receive reduced road taxes and customs duties.

8. Other Costs

• Inspection Fees: PKR 1,000–3,000.
• Agent/Dealership Fees: Up to PKR 10,000 for registration assistance.

Conclusion

The total cost of buying a new car in Pakistan goes far beyond the price tag of the vehicle itself. Car buyers must consider the various taxes and fees, such as sales tax, registration fees, road tax, and customs duties (for imported cars). By understanding these costs upfront, buyers can make more informed decisions and avoid unexpected expenses. Furthermore, opting for environmentally friendly vehicles such as electric or hybrid cars may offer some savings in taxes and duties, making them a more attractive option for cost-conscious buyers. Always ensure to factor in these charges when budgeting for a new car purchase in Pakistan.