Federal · Section 8, Finance Act 2022 · Tax Year 2026-2027
Capital Value Tax (CVT) Calculator
One per cent on motor vehicles, with a value that falls 10% a year and reaches nil after five. It turns on engine size, not price — and the foreign-asset charge that sat beside it has been abolished, which a lot of what you will read online has not caught up with.
CVT on foreign assets is gone. The Finance Act 2026 abolished this limb outright — clause (b) of section 8(2), clause (c) of section 8(3) and serial 4 of the table in the First Schedule were all omitted. A resident individual has no CVT to pay on foreign assets for Tax Year 2026-2027. The calculation is kept here for earlier years and because the charge is still widely described online as if it were live.
A claim worth correcting
CVT is not charged on a Rs 5 million threshold
That CVT applies to a motor vehicle whose VALUE exceeds Rs 5,000,000. Not the enacted law.
The Rs 5,000,000 figure is widely repeated by news and advisory pages and appears to trace to an amendment moved while the Finance Bill 2022 was in progress. It is not the test in the Act. Two independent readings of the enacted provision — PwC's memorandum on the Finance Acts 2022 and the Karachi Tax Bar Association's presentation on the Act as passed — both give the engine-capacity test and neither mentions a value threshold. This matters because the two catch different vehicles: an 1,800cc car worth Rs 4 million is chargeable under the Act and would not be under the Rs 5 million claim.
Engine capacity exceeding 1300cc, or for an electric vehicle a battery power capacity exceeding 50 kWh. SETTLED: PwC's memorandum on the Finance Acts 2022 sets the enacted charge out in a table and gives this test verbatim, agreeing with the Karachi Tax Bar Association's presentation on the Act as passed.
Who collects it
And why you cannot avoid it by buying privately
The Collector of Customs collects it at the time of import on an imported vehicle; the local manufacturer or assembler at the time of sale on a locally built one; and the auctioneer on a vehicle sold by public auction or by tender. Where the sale is on instalments, CVT is collected with the FIRST instalment. As a backstop, the motor vehicle REGISTERING AUTHORITY collects it at registration or transfer of registration if it was not collected at import, purchase or auction — so it follows the vehicle rather than being lost.
CVT is not new. Section 7 of the Finance Act 1989 charged it on transfers of immovable property, modaraba certificates, listed shares and motor vehicles. It was withdrawn gradually and abolished on every asset from 19 April 2020, then re-enacted in this narrower form by the Finance Act 2022.
How the value falls
Ten per cent a year, then a step to nil
The value is reduced by 10% for each year. The Karachi Tax Bar presentation phrases the starting point as the END of the financial year in which the vehicle was acquired and PwC's as the year of acquisition; counted in completed years these give the same answer, and there is no reduction in the year of acquisition itself. The value is taken as zero after five years from the end of the financial year of acquisition, at which point no CVT is due at all.
Read literally, those two rules do not meet. Straight-line at 10% a year leaves 50% of the original value standing at the five-year mark, and then the value drops to zero rather than continuing down to nothing. This calculator applies both rules exactly as written and shows the step, because smoothing it would be inventing a rule the source does not contain.
Reading the result
The value falls, so the charge has an end date
Because the assessed value reduces each year and reaches nil after five, CVT on a vehicle is a charge with a finite life rather than a permanent annual cost. A vehicle past that point attracts nothing, however valuable it remains.
That makes the age of the vehicle, not its price, the first thing to establish.
The test is capacity, not value
The charge turns on engine capacity, or battery capacity for an electric vehicle. An expensive small-engine car can fall outside it while a cheaper large-engine one is caught. Anyone assuming CVT is a tax on expensive cars has the wrong mental model, and will get the answer wrong in both directions.
The foreign-asset version is widely misdescribed
CVT on foreign assets attracted a great deal of commentary, and much of what is still published online describes it as though it were current. It is worth checking the provision itself for the year you are dealing with rather than relying on secondary summaries, which have not all been updated.
Where this stops
This computes the vehicle charge from the values and dates you enter. CVT has been levied on different things at different times under different Finance Acts, so confirm which limb you are dealing with before applying a rate to it.
FAQs
Capital Value Tax FAQs
Do I still pay CVT on my foreign assets?
No. The Finance Act 2026 abolished that limb outright — the charging clause, the valuation clause and the 1% rate line were all omitted together. A resident individual has no CVT to pay on foreign assets for Tax Year 2026-2027. A great deal of published material still describes the charge as live, which is why the calculation is kept here for earlier years with the repeal stated plainly.
What was the foreign-asset charge while it lasted?
1% of the aggregate value of foreign assets held by a resident individual, but only where that aggregate exceeded Rs 100 million at the end of the tax year. Once over, the whole value was charged, not the excess. Value was the total cost on the last day of the tax year converted at the State Bank rate, or fair value if cost could not be determined.
Is CVT on motor vehicles still charged?
Yes, for vehicles still within the window. It has applied since 1 July 2022 at 1% of value, and the value falls by 10% a year from the end of the financial year of acquisition until it is taken as zero after five years. A vehicle acquired in 2022-23 therefore stops attracting it after 2027-28.
Which vehicles are caught?
Those with an engine capacity exceeding 1300cc, and electric vehicles with a battery power capacity exceeding 50 kWh. Nothing else. You will often read that CVT applies to vehicles worth more than Rs 5 million — that is not the enacted law. PwC's memorandum on the Finance Acts 2022 sets the charge out in a table using the engine-capacity test, and the Karachi Tax Bar Association's presentation on the Act as passed says the same. Neither mentions a value threshold.
So an expensive small car escapes CVT?
Yes. A 1000cc car costing Rs 6 million is not caught, because the test is engine capacity rather than price. Equally, an 1,800cc car worth Rs 3 million is caught. That is what the Act says, and it is precisely why the Rs 5 million claim misleads.
Can I avoid it by buying privately?
No. If CVT was not collected at import, at sale by a local manufacturer, or at auction, the motor vehicle registering authority collects it at registration or on transfer of registration. It follows the vehicle.
Is CVT a new tax?
No. Section 7 of the Finance Act 1989 charged CVT on transfers of immovable property, modaraba certificates, listed shares and motor vehicles. It was withdrawn gradually and abolished on every asset from 19 April 2020, then re-enacted in this narrower form by the Finance Act 2022.
How is the vehicle value worked out?
By how the vehicle was obtained. An imported vehicle uses the import value assessed by Customs including all duties and taxes paid at import. A locally manufactured or assembled one uses the ex-factory price including all taxes. An auction purchase uses the auction value including all taxes paid.
Why does the calculator show a jump to zero?
Because the rules as written do not meet. Reducing the value by 10% a year on a straight line leaves half the original value standing at the five-year mark, and a separate rule then says the value is zero after five years. Both are applied exactly as written, and the step is shown rather than smoothed — smoothing it would mean inventing a rule the source does not contain.
When is the reduction first applied?
From the end of the financial year in which the vehicle was acquired, so there is no reduction in the year of acquisition itself. A vehicle bought in 2022-23 is still valued in full for that year and first drops to 90% in 2023-24.
Who collects it?
The Collector of Customs at the import stage on an imported vehicle, and the local manufacturer or assembler on a locally built one. Registration authorities, manufacturers and auctioneers file quarterly and annual statements in Iris under rule 4 of the Capital Value Tax Rules 2022.
Was CVT challenged in court?
Yes. The constitutional validity of the foreign-asset limb was challenged and, as at the Finance Bill 2026, remained pending before the Federal Constitutional Court. The argument is whether Parliament may tax assets lying outside Pakistan's territory at all.
Is this a filing figure?
No. It is an estimate from the published rules. CVT is levied, collected and appealed under the Income Tax Ordinance 2001, and the position on your vehicle depends on the value actually assessed and on which threshold test the department applies.
Related tools
Importing the vehicle in the first place?
Customs duty, regulatory duty and sales tax at the import stage set the value CVT is then charged on.
Open the Car Import Duty Calculator