Pakistan’s proposed Budget 2026-27 is set to increase the cost of buying and owning a vehicle, especially for people who are not on the Federal Board of Revenue’s Active Taxpayers List (ATL).
The government plans to introduce new taxes that will raise vehicle prices, increase fuel costs and widen the financial gap between filers and non-filers from July 1.
One major change is the increase in the Climate Support Levy on locally assembled and imported petrol vehicles with engine capacities up to 1300cc. The levy will rise from 1% to 3% of the ex-factory price.
The measure will directly affect popular models such as the Suzuki Alto, Suzuki Cultus and Suzuki Swift.
For a vehicle priced at Rs3 million, the higher levy will add around Rs60,000 to the ex-factory cost before registration and other taxes.
Motorists will also pay more at fuel stations. The Climate Support Levy on petrol will increase from Rs2.50 per litre to Rs5 per litre under Pakistan’s IMF-linked fiscal commitments.
For a car with a 35-litre fuel tank, the increase will add about Rs87.50 to each refill.
Non-Filers Face Higher Registration Charges
The biggest impact will come at the vehicle registration stage.
The government wants to expand the tax net and encourage more people to file returns. Officials aim to make non-compliance more expensive through higher withholding taxes.
Under Section 231B of the Income Tax Ordinance, non-filers already pay double the withholding tax charged to ATL members when registering a new vehicle.
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For vehicles up to 850cc, filers pay Rs10,000 while non-filers pay Rs20,000. For vehicles between 1301cc and 1600cc, filers pay Rs5,000 while non-filers pay Rs10,000.
Owners of vehicles above 2500cc pay Rs15,000 if they are filers and Rs30,000 if they are non-filers.
These charges apply before provincial token taxes, transfer fees and other registration costs.
Provincial governments also offer benefits to tax-compliant citizens. In Khyber Pakhtunkhwa, an 1800cc vehicle owner pays Rs6,000 in annual token tax as a filer and Rs12,000 as a non-filer. Punjab has adopted a value-based taxation system that also rewards registered taxpayers.
Filing Returns Could Save Buyers Money
Tax experts say ATL membership has become increasingly important for major financial transactions.
The FBR allows salaried individuals to use their CNIC as their National Tax Number. Taxpayers can file returns online through the IRIS portal.
Even individuals with no tax liability can submit a zero-tax return and qualify for ATL status.
The deadline for Tax Year 2025 returns is September 30, 2026. Late filers can restore their status by paying a surcharge, but they still face higher rates than active taxpayers.
The latest budget measures show that tax status now plays a larger role in vehicle purchases.
Higher car prices, rising fuel costs and increased registration charges will add pressure on buyers. Non-filers will face the biggest burden.
For many Pakistanis, filing a tax return before buying a vehicle could save thousands of rupees and reduce costs throughout the year.
