rewrite this content with different wording and keep HTML tags
It’s not even been twenty-four hours since budget since the new fiscal budget 2024-25 was proposed by Finance Minister Muhammad Aurangzeb; the local car industry has started feeling the heat of tax exemptions and the imposition of newer ones.
Earlier, there were reports swirling around in the market narrating that the incumbent government is gearing up to impose new taxes on imported used cars whilst maintaining tax exemption on electric and hybrid vehicles. However, things are reversed for all, including locally assembled hybrid electric vehicles (HEVs) except fully electric cars.
The Stab in the Back of Local Industry
The whole episode commenced soon after “Finance Bill 2024” came to the surface. As per the bill, clause 73 of the 8th schedule, allowing the government to collect 8.5% general sales tax on locally assembled HEVs from “The Sales Tax Act, 1990,” is omitted. Consequently, the move has pushed the CKD HEVs into the general list of vehicles, observing a GST of 25%.
Suffice it to say, the locally assembled HEVs are going to witness a price jump. Surprisingly, in budget speech, Mr. Aurangzeb revealed that the government is going to facilitate the local industry but things are different in disguise.
Moreover, the finance minister proposed withdrawing the tax exemption on electric cars costing above $50,000, meaning high-level EVs will be affected. “The people who buy these cars can pay the taxes and duties on such vehicles,” the finance minister mentioned.
New With Holding Tax
Same is the situation with withholding tax on new cars, previously based on engine capacity, will now be calculated based on the invoice price of the vehicle (applicable om cars up to 2,000cc).
For Instance, you recently bought a Suzuki Wagon R in Pakistan for Rs. 3.8 million. Under the old registration system, the fee would have been Rs. 20,000. However, with the proposed budget changes, the new registration fee for the same car could be Rs. 38,000, a significant increase.
What do you think about the government’s recent move regarding CKD HEVs? Tell us in the comments section.
