Thursday, 22 February 2024
New Taxes on Cars

New Taxes on Cars

After a lot of wait and speculation, the National Assembly has finally approved the mini-budget, which has created trouble for the car industry.

If you remember, the government proposed several Federal Excise Duty (FED) and Sales Tax hikes for locally assembled and imported cars. Let us see the new taxes on cars (sales tax, FED and Regulatory Duty).

If you want to become active tax filer or want to get tax, accounting and corporate services in Pakistan then we are here to provide you professional services! Call: 0092-3334875413 |

General Sales Tax on Hybrid and EVs Cars

The most notable amendment is that the Federal Board of Revenue will now charge 12.5 percent General Sales Tax (GST) on the import of Completely Built-Up (CBU) Electric Vehicles (EVs).

However, the GST on locally-manufactured Hybrid Electric Vehicles (HEVs) with up to 1,800cc engine displacement will be charged at a reduced rate of 8.5 percent, instead of the 12.5 percent that was recommended earlier in the Finance (Supplementary)Bill in 2021.

The GST rate on locally-manufactured HEVs with engine displacement between 1,801cc and 2,500cc will be 12.75 percent. The government has also amended the rates of the Federal Excise Duty (FED) on locally manufactured and assembled cars, SUVs, and commercial vehicles.

See also  FBR issues new active taxpayers list for Tax Year 2022

locally assembled hybrid cars:

  • 8.5% on hybrid cars up to 1800cc
  • 12.75% on hybrids from 1801-2500cc

CBU/imported electric vehicles: 

  • An increase of GST to 12.5% from the previous 5%.

FED on Locally Assembled Cars

As per the revisions, FED at the rate of 2.5 percent will be charged on locally assembled vehicles with engine capacity up to 1300cc. Furthermore, 5 percent FED would be charged on vehicles with engine capacity between 1301cc and 2000cc and 10 percent FED on vehicles of engine capacity of 2001cc and above.

  • 2.5% on 0-1300cc cars. It is pertinent to mention that FED on 0-1000cc was 0%.
  • 5% on 1301-2000cc cars. Earlier, the duty on 1001-2000cc was 2.5%; however, the government has now changed the categories of engine size. 
  • 10% on cars above 2000cc, which was 5% before the mini-budget.

Car Prices after Mini Budget
READ ALSO: Car Prices after Mini Budget

New Regulatory Duties (RD) rates approved for CBU vehicles

Other than these amendments, the following are the new Regulatory Duties (RD) rates approved for CBU vehicles:

  • RD on Internal Combustion Engine (ICE) vehicles with engine displacements above 850cc have been increased from 15 percent to 50 percent.
  • RD on Hybrid Electric Vehicles (HEVs) with engine displacements between 1,500cc to 1,800cc increased from 15 percent to 50 percent.
  • RD on EVs with battery-packs larger than 50 kWh has been increased to 27 percent.
See also  FBR takes new steps for ease of doing business & taxpayers facilitation

The government has imposed these taxes on the car industry to curb the towering import bill and the overall number of imports within the car industry. However, these tax rates could also result in another wave of price-hikes, which is likely to hurt the demand for new vehicles significantly.

tax accounting services top tax consultants lahore pakistan
Ads: - Your Tax Experts and Consultants

Welcome to

Providing Expert Tax Services for Individuals and Businesses

About Us

At, we are dedicated to providing comprehensive tax solutions tailored to meet the needs of individuals and businesses. With years of experience in the industry, our team of tax experts is equipped to handle various tax matters, including tax planning, preparation of tax returns, and compliance.

We strive to stay up-to-date with the latest tax laws and regulations, ensuring that our clients receive accurate and reliable advice. Our commitment to client satisfaction and our in-depth knowledge of the tax landscape make us the trusted choice for all your tax-related needs.

Contact Us

For inquiries or to schedule a consultation, please reach out to us: