The Federal Government has announced massive tax reductions for Electric Vehicles (EV) in the Annual Budget 2021-22 in order to support and encourage the manufacturing of electric vehicles (EV) in the country.
Speaking at the National Assembly, the Finance Minister Shaukat Tareen said that the government has ended tax on the import of Completely Knocked Down (CKD) units for local assembly of electric vehicles (EV).
Meanwhile, the sales tax on locally assembled electric cars will be reduced to 1% from 17%, which is a massive 16% reduction. Furthermore, there will be no Value Added Tax (VAT) on import of electric vehicles and CKD kits.
The minister added that the Federal Excise Duty (FED) on 4-wheeler Electric Vehicles (EV) has also been removed as per the Electric Vehicle Policy introduced in October 2020.
Reduced Taxes For Cars Below 850cc
The Federal Government has also announced reduced taxes on cars with engine capacity of 850cc or less in an attempt to bring these vehicles in the purchasing power of the middle class people.
Finance Minister Shaukat Tareen announced that the government has cancelled the Federal Excise Duty (FED) on locally assembled cars under 850cc while reducing sales tax to 12.5% from 17%.