Latest News: New Car Levy Spares Bikes, Scooters and Rickshaws
The government is planning a brand-new tax on cars, and many people are asking one simple question: will it hit motorcycles and electric scooters too? The short answer is no. Under the draft auto policy, two-wheelers and three-wheelers are exempt from the new charge.
The new charge is called the Automotive Development Levy. It is part of the draft Auto Policy 2026-31, which Prime Minister Shehbaz Sharif has approved. The levy targets petrol and diesel vehicles with bigger engines, while small cars, bikes, rickshaws and tractors stay out of it.
What Is the Automotive Development Levy?
It is a new charge on imported as well as locally assembled or manufactured vehicles. It applies to internal combustion engine (ICE) vehicles, meaning cars and commercial vehicles that run on petrol or diesel. The rate depends on the type of vehicle and its engine size.
The idea is simple. Bigger and more fuel-hungry vehicles pay more, while smaller and everyday vehicles pay nothing. This fits the policy’s wider aim of pushing people towards cleaner and more efficient transport.
Proposed Levy Rates by Vehicle Type
Here are the proposed levy rates under the draft policy, as reported by ProPakistani:
| Vehicle Category | Proposed Levy |
|---|---|
| 2-wheelers and 3-wheelers | 0% |
| Agricultural tractors | 0% |
| Cars below 1,000cc | 0% |
| Cars 1,001cc to 2,000cc | 2% |
| Cars above 2,000cc | 10% |
| Trucks and light commercial vehicles | 2% |
| Buses and vans | 2% |
| Prime movers (non-agricultural) | 2% |
So if you ride a motorcycle, an electric scooter or a rickshaw, this levy will not add anything to your cost. The same goes for small hatchbacks under 1,000cc.
How Much Will the Government Collect?
The draft policy expects the levy on locally made vehicles alone to bring in about Rs. 188.58 billion over five years. Yearly estimates are fairly stable:
| Fiscal Year | Expected Collection |
|---|---|
| 2026-27 | Rs. 37.71 billion |
| 2027-28 | Rs. 38.46 billion |
| 2028-29 | Rs. 38.29 billion |
| 2029-30 | Rs. 37.30 billion |
| 2030-31 | Rs. 36.83 billion |
There are separate estimates for imported vehicles as well. The final amount will depend on how many vehicles are sold or imported and the exact method used to calculate the levy.
Why the Automotive Development Levy Matters for Bike Riders
Pakistan has millions of motorcycle users, and most of them are daily commuters. Keeping two-wheelers exempt means the levy will not push up the price of bikes. For people thinking about going electric, this is another sign that small, efficient vehicles are being protected.
A Good Time to Look at E-Bikes
With big cars getting costlier and fuel prices staying high, an electric two-wheeler is one of the most budget-friendly options. You can compare the latest electric bike prices in Pakistan or browse electric scooter and scooty prices. Rickshaw owners can also look at the PM electric rickshaw scheme.
What Car Buyers Should Expect
If you are planning to buy a mid-size car between 1,001cc and 2,000cc, a 2 percent levy may add a small amount to the final price once the policy is notified. Buyers of large SUVs and luxury cars above 2,000cc could see a much bigger jump because of the proposed 10 percent rate. Small car owners, on the other hand, can relax, as vehicles below 1,000cc are fully exempt.
Commercial users such as transporters and goods carriers will also feel some impact, since trucks, light commercial vehicles, buses and vans carry a 2 percent rate. This may slightly raise transport costs over time. For everyday commuters, though, the cheapest and safest choice remains a motorcycle or an electric bike, which are kept completely outside the levy.
How to Apply for an Electric Bike With Subsidy
If you want an e-bike on easy terms, the PM electric bike scheme is worth checking. Follow these steps:
- Read the eligibility criteria first.
- Keep your required documents ready.
- Do your PAVE registration online.
- Use the how to apply guide and estimate savings with the subsidy calculator.
Remember, the levy is still part of a draft. The exact rates, the calculation method and the start date will decide the real impact on car prices in Pakistan. For more on recent tax changes in the bike industry, read our earlier story on duties on motorcycle parts.
Also Read: Govt Rejects 18% IMF Tax on Electric Vehicles | Petrol Price Up Again, E-Bike Savings Explained | Islamabad Changes Two Feeder Bus Routes | Punjab Cracks Down on Fake Number Plates
Frequently Asked Questions
Will the Automotive Development Levy apply to motorcycles?
No. Two-wheelers and three-wheelers, including motorcycles, scooters and rickshaws, carry a zero rate under the draft policy.
What is the levy rate on cars above 2,000cc?
Cars with engines above 2,000cc face a proposed levy of 10 percent, while 1,001cc to 2,000cc cars face 2 percent.
How much will the government earn from this levy?
The draft policy projects about Rs. 188.58 billion over five years from locally assembled or manufactured vehicles.
Are cars below 1,000cc exempt?
Yes. Cars below 1,000cc, along with agricultural tractors, are exempt from the proposed levy.
