Thursday, 23 March 2023

Govt considering to reduce taxes on cars in upcoming budget

The government is considering slashing taxes on new imported and locally assembled cars of up to 800cc engine capacity in the upcoming budget.

The proposal, seeks to cut import duties and taxes on new imported cars by up to 63% and cut down them by nearly 7% for locally made cars. The proposal includes eliminate 50% regulatory duty, either eliminating 7% additional customs duty or reducing the customs duty by the same percentage and ending 2.5% federal excise duty on new imported cars.

In addition to that, there is also a proposal to abolish 5% withholding tax and reduce the standard general sales tax (GST) rate of 17% to 12% on the import of new cars of up to 800cc. The existing combined taxes and duties on new imported cars of up to 800cc are about 132% of the price which, if this proposal is enforced, will come down by 63% of the value of imported cars.

In the small category, the price of a new imported car may reduce by Rs300,000 to Rs400,000, subject to enforcement of this proposal.

Anyone can import new vehicles against payment of duties and taxes levied under the existing import procedures. Requirements laid down in the Import Policy Order and Customs law.

There is also a proposal to end 2.5% federal excise duty, reduce the GST rate to 12% and eliminate Rs7,500 advance income tax on locally made cars of up to 800cc. Subject to acceptance of the proposal, the price of a 660cc Suzuki VXL may reduce down by Rs109,000 to Rs1.53 million.

Finance Minister Shaukat Tarin is in favour of reducing some taxes, but he is concerned of its negative implications for the revenues. One suggestion is that in order to compensate for some of the revenue losses, the duty rates of 1,300cc and above may be increased.

tax accounting services top tax consultants lahore pakistan

Cars | Taxes | Imports | Budget | 2021 | FBR | Federal Board of Revenue | Shaukat Tareen |

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