The Economic Coordination Committee (ECC) of the Cabinet has given the green light to a proposal presented by the Federal Board of Revenue (FBR) to raise the sales tax rate on locally manufactured or assembled vehicles.
Chaired by Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar, the ECC meeting was attended by several key ministers, including Minister for Privatization and Inter-Provincial Coordination Fawad Hasan Fawad, Minister for Interior, Commerce & Industries Mr. Gohar Ejaz, and others.
The proposal, titled “Rationalisation of Criterion of Enhanced Rate of 25% Sales Tax on Locally Manufactured/Assembled Vehicles (PCT87.03)”, was thoroughly discussed during the meeting and subsequently approved.
This decision is expected to lead to a further increase in the prices of locally manufactured vehicles, which have already witnessed a decline in sales during the initial seven months of the fiscal year 2023-24.
Govt Increases Taxes On These Local Cars
Under the Pakistan Customs Tariff Code 87.03, vehicles such as motor cars and other motor vehicles primarily designed for transporting persons, including station wagons and racing cars, are included.
According to a social media user, this decision is likely to impact vehicles with engine capacities exceeding 1000cc. Previously, these vehicles were subject to an 18 percent tax rate.
The approved proposal aims to rationalise the taxation structure on locally manufactured vehicles, which is expected to have implications for both the automotive industry and consumers alike.
