Introduction
For decades, overseas Pakistanis have played a vital role in Pakistan’s economy—sending remittances, investing in businesses, and supporting their families back home. Among their many contributions, one key trend has been the import of used cars under special government schemes like the Personal Baggage and Gift Scheme.
But now, big changes are on the horizon. According to the latest update (August 2025), the Government of Pakistan is preparing to merge these car import schemes into a new commercial import policy that will come into effect from October 1, 2025. This new policy introduces a sliding scale of duties on used car imports, raising questions about affordability, foreign exchange reserves, and the future of the local auto industry.
In this blog, we’ll break down what this means for overseas Pakistanis, the auto market in cities like Islamabad, Rawalpindi, Lahore, and Karachi, and how families in Pakistan can prepare. Plus, we’ll explore practical alternatives such as renting cars through trusted providers like Al Farooq Rent a Car while the new policy unfolds.
Key Highlights (August 2025 Update)
- Major policy shift: New commercial import policy begins October 1, 2025.
- Baggage & Gift schemes: Likely to be merged into one commercial policy.
- Additional duty structure: Starts at 40% extra in 2025, decreasing annually until 2030.
- Impact on EVs: Still unclear—government reviewing how Electric Vehicles will be treated.
- Concerns: Lawmakers warn about foreign exchange drain and possible harm to local automakers.
- Resale market: A surge in used car imports may flood markets in Rawalpindi, Islamabad, and Lahore.
Current Car Import Schemes (How They Work Today)
To understand why this new policy matters, let’s quickly revisit the current options for overseas Pakistanis:
1. Personal Baggage Scheme
This allows overseas Pakistanis to bring back a used car when returning home. It’s typically meant for personal use and comes with tax/duty relaxations. For example, a Pakistani returning from Dubai could import their Toyota Corolla or Honda Civic under this scheme.
2. Gift Scheme
Under this, overseas Pakistanis can send a car as a gift to a family member back in Pakistan. It’s a popular option in Rawalpindi, Lahore, and Karachi, where many families rely on relatives abroad to provide affordable vehicles.
3. Transfer of Residence
Separate from the above, this allows a Pakistani permanently moving back to bring their car with them.
These schemes were designed to support the diaspora community and help their families—but they also created loopholes, with some cars entering the market in bulk rather than being used personally.
What’s Changing? The New Five-Year Commercial Import Policy
Starting October 1, 2025, these schemes are expected to merge into a five-year commercial import policy. Here’s how duties will work under the new system:
| Year | Additional Duty on Used Cars |
|---|---|
| 2025–26 | 40% (on top of existing taxes) |
| 2026–27 | 30% |
| 2027–28 | 20% |
| 2028–29 | 10% |
| 2029–30 | 0% (only standard taxes apply) |
This means that if you’re planning to bring a car home in Islamabad (postal code 44000) or Rawalpindi (postal code 46000), you’ll face steep duties in the early years—potentially making imports much more expensive.
Concerns Raised in the National Assembly
During discussions in the National Assembly Standing Committee on Commerce, several key concerns were highlighted:
- Foreign Exchange Drain
Pakistan’s economy is already under pressure. Lawmakers like Usama Ahmed Mela and Gul Asghar Khan questioned whether a surge in car imports would drain foreign reserves, especially if thousands of vehicles are brought in annually. - Impact on Local Industry
Local manufacturers—like Pak Suzuki, Indus Motors, and Honda Atlas—fear competition from cheap imported cars. A flood of Japanese imports, for example, could depress sales of locally assembled Corolla, City, and Alto models. - Inclusion of EVs
With EV adoption growing globally, many are asking: Will EVs also face these extra duties? If yes, Pakistan risks slowing down the shift to clean energy.
How the Policy Will Affect Overseas Pakistanis and Families
For overseas Pakistanis in the UAE, UK, Saudi Arabia, and USA, these changes may significantly affect their ability to send cars home.
- Example: A used Toyota Hilux currently worth PKR 12 million could see its price rise by millions once the 40% duty is applied.
- Families in Rawalpindi, Islamabad, and Lahore may face higher costs when receiving gifted cars.
- Second-hand markets in Karachi’s Shershah and Rawalpindi’s Chah Sultan could see a rise in prices.
Electric Vehicles (EVs): The Big Question
Globally, EV adoption is accelerating. In Pakistan, cars like the MG ZS EV, BYD Dolphin, and imported Nissan Leaf are gaining attention.
But under the new import rules, it’s still unclear whether EVs will get special exemptions or fall under the same duty scale. If EVs are taxed heavily, Pakistan risks falling behind in sustainable transport—especially in urban centers like Islamabad and Lahore, where EV demand is rising.
How It May Reshape Pakistan’s Auto Market
- Resale values: More used imports could lower prices of local models like Suzuki Alto, Toyota Yaris, and Honda City.
- Showrooms in Islamabad and Rawalpindi: Dealers may stock up on imported options if duties ease over time.
- Karachi Port: Being the main entry point, Karachi could face import traffic congestion, delaying deliveries upcountry.
What Overseas Pakistanis Should Do Before October 2025
- Plan Early: If you want to send a car soon, consider doing it before October 2025.
- Calculate Costs: Factor in duties + shipping charges.
- Consider Alternatives: If duties make imports unaffordable, renting vehicles locally may be smarter.
Al Farooq Rent a Car – Your Practical Alternative
For families in Islamabad, Rawalpindi, and Lahore, or for overseas Pakistanis visiting Pakistan temporarily, the simplest solution is to rent a car.
At Al Farooq Rent a Car, we provide:
- Rent a car in Islamabad & Rawalpindi for daily or monthly use.
- Rent a car with driver—perfect for visitors unfamiliar with local roads.
- City-to-city car rental including Islamabad to Lahore and Islamabad to Faisalabad rent a car.
- Airport pickups & drop-offs: Karachi, Lahore, and Islamabad airport car rental.
- Affordable rent a car rates—whether for family use, business, or tourists.
Instead of stressing about new policies and duties, overseas Pakistanis can enjoy peace of mind by renting a vehicle that fits their budget and schedule.
Conclusion
Pakistan’s upcoming commercial car import policy (October 2025) is a major shift that will reshape how overseas Pakistanis send cars home. With 40% extra duties in the first year, gradually easing by 2030, the affordability of imported cars is under question.
While the final decision is pending—especially regarding EV imports—families in Islamabad, Rawalpindi, and across Pakistan must prepare for higher costs and policy uncertainty.
In the meantime, renting a car is a smart, flexible option for those who need reliable transport without the burden of high import duties. And that’s exactly where Al Farooq Rent a Car steps in to make travel comfortable and affordable.
