Reports: Sales Tax on Cars Over Rs. 40 Lacs Now 25%

Jawad

15 Feb 2024

704

Reports: Sales Tax on Cars Over Rs. 40 Lacs Now 25%

The interim government has made a sudden decision that will directly impact the prices of all cars priced at Rs. 40 lacs and with an engine capacity below 1,400cc. The General Sales Tax (GST) on these cars has been increased from 18% to 25%. It's important to note that a 25% GST or Luxury Tax is already applicable to cars above 1,400cc.

ECC's Decision:

According to media reports, the Economic Coordination Committee (ECC) on Wednesday approved the proposal for "Rationalization of Criterion of Enhanced Rate of 25% Sales Tax on Locally Manufactured/Assembled Vehicles." Economist Ali Khizer, when asked about the new tax, explained that any vehicle above Rs. 40 lacs will now be considered a luxury vehicle and taxed at 25%. He also clarified that hybrid and electric vehicles (EVs) are exempt from this new tax.

Analyst Abdul Rehman tweeted: "Any 1000cc+ car is now a luxury in Pakistan as ECC has approved 25% sales tax instead of 18% for all cars valued above Rs. 40 lac." He further elaborated that previously, a 25% luxury tax was applicable only to cars with an engine capacity of 1400+cc.

Official Notification:

The Ministry of Finance's official statement mentions that the proposal was passed on Wednesday. However, there are no specific details about the new policy and its implementation.

Cars Affected:

If the 25% GST is implemented on cars above Rs. 40 lacs and with an engine capacity below 1,400cc, the prices of these cars will likely increase in the near future. Here are some examples of affected cars and their current ex-factory prices:

Suzuki Cultus VXL (Rs. 4,084,000)

Suzuki Cultus Auto Gear Shift (Rs. 4,366,000)

Suzuki Swift GL Manual (Rs. 4,336,000)

Suzuki Swift GL CVT (Rs. 4,654,000)

Suzuki Swift GLX CVT (Rs. 5,040,000)

Toyota Yaris GLI MT 1.3 (Rs. 4,399,000)

Toyota Yaris ATIV MT 1.3 (Rs. 4,659,000)

Toyota Yaris GLI CVT 1.3 (Rs. 4,689,000)

Toyota Yaris ATIV CVT 1.3 (Rs. 4,899,000)

Toyota Yaris AERO CVT 1.3 (Rs. 5,099,000)

Honda City 1.2L M/T (Rs. 4,699,000)

Honda City 1.2L CVT (Rs. 4,829,000)

Proton Saga 1.3L Ace A/T (Rs. 4,099,000)

It's important to note that these are the current ex-factory prices of these cars and their variants. The situation will become clearer after the official notification, and car companies will likely adjust their prices accordingly. Until then, it's a waiting game.