The Federal Government has revealed that reduced taxes which were announced for cars up to 850cc in the Annual Budget 2021-22 have now been extended to vehicles with engine capacity of up to 1000cc.
The announcement was made by Federal Minister for Finance Shaukat Tareen in the National Assembly Session on Friday who said that the decision has been taken by the government after learning about the limited number of vehicles under 850cc.
Initially, the Federal Minister Shaukat Tareen said that the 2.5% Federal Excise Duty (FED) will no longer be charged on locally assembled cars under 850cc while the sales tax on these vehicles have also reduced to 12.5% from the earlier 17%. However, the reduced taxes will now be applicable on cars up to 1000cc.
Cars Expected To Get Cheaper
Following implementation of the Annual Budget 2021-22, there are several cars up to 1000cc which will likely get cheaper due to reduced taxes, including:
Suzuki Alto (660cc)
Prince Pearl (800cc)
United Bravo (800cc)
Suzuki Wagon R (1000cc)
Suzuki Cultus (1000cc)
Kia Picanto (1000cc)
New Auto Policy
It is pertinent to mention that the new auto policy which was presented earlier, the government aims to reduce car prices to enable middle class of the country to buy them while encouraging local assembly and production along with export of vehicles.
The new auto policy will have significant impact on localization of parts, productivity and revenue collection, which will benefit all stakeholders involved, which includes the customer, manufacturer and government.
It bears mentioning that the Automotive Development Policy (2016-2021) will also expire at the end of this month. This policy has lead to new companies entering the local automotive industry leading to increased competition in the sector.
Meanwhile, the government is focusing on electric vehicles and there are massive tax relaxations in the Budget 2021-22 in order to support entrance of EV in Pakistan.