Reports indicate that the sales tax on cars above Rs. 40 Lacs has been increased to 25%

The caretaker government has made a sudden decision to raise the General Sales Tax (GST) on cars priced at Rs. 40 lacs and with an engine capacity below 1,400cc from 18% to 25%. This means that the prices of these cars will increase. It’s worth noting that the 25% GST or Luxury Tax is already applied to cars above 1,400cc.

The Economic Coordination Committee (ECC) agreed to the proposal of “Rationalization of Criterion of Enhanced Rate of 25% Sales Tax on Locally Manufactured/Assembled Vehicles.” Economist Ali Khizer explained that any vehicle above Rs. 40 lacs will be considered a luxury vehicle and taxed at 25%, excluding hybrid and electric vehicles (EVs).

The official statement from the Ministry of Finance confirms that the proposal was approved, but details of the new policy and its implementation are yet to be released.

Officials from the Federal Board of Revenue (FBR) and Engineering Development Board (EDB) said they can only share details after the release of the official notification.

If the 25% GST is enforced, the prices of cars above Rs. 40 lacs and with an engine capacity below 1,400cc will increase. Some of the cars that will be affected include Suzuki Cultus, Suzuki Swift, Toyota Yaris, Honda City, and Proton Saga.

It’s important to wait for the official notification to get clearer information. Once the official notification is released, car companies will revise their prices accordingly.