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In the recent fiscal budget 2024-25, the incumbent government made several amendments to tax charts, which in turn is now affecting the already vulnerable auto industry of Pakistan. Since the Finance Bill 2024-25 has been approved, the new duties and taxes have now been officially inflicted.

The government has implemented a new 15% regulatory duty (RD) on imported used vehicles with engine capacities ranging from 1300cc to 1800cc. Above 1800cc, the RD is 70-90%. Meanwhile, there is no regulatory duty on cars under 1300cc. This simply means that popular models like Toyota Aqua, Honda Vezel, and CHR will see a price increase.

Engine Capacity RD on Hybrid Cars (%) RD on Petrol Cars (%)
0-1300cc – –
1300-1800cc 16% 16%
Above 1800cc 15% 70-90%

Exemption for Smaller Cars

However, smaller-engine cars (below 1300cc) like the Daihatsu Mira, Nissan Dayz, and Toyota Vitz are exempt from this RD and will continue with their current fixed taxes. This exemption might benefit these smaller cars but could potentially hurt local manufacturers like Pak Suzuki, which produces vehicles like the Alto (660cc), WagonR (1000cc), Cultus (1000cc), and Swift (1200cc).

Imported HEVs Face Massive Price Hike

The biggest impact will likely be felt on used Hybrid Electric Vehicles (HEVs) exceeding 1300cc. These include models like Honda Vezel, Toyota Yaris Cross, Honda CHR HEV, and Toyota Corolla Cross. Their prices are expected to jump by a significant Rs. 2.5 million to Rs. 3 million, pushing their current market value from Rs. 7.5 million to Rs. 9.5 million.

New Withholding Tax

Moreover, the government have also revised the withholding tax which will now be charged on the ex-factory price rather than their engine capacity like earlier. The move has forced the local auto makers to increase their car prices. A day back, MG Pakistan and Regal Automobiles has inched up their price mentioning new tax effect. In coming days, market will observe extending this price hike series.

The episode doesn’t conclude here, meaning, there is no custom duty exemptions on old and new imported (CBU) hybrid cars under SRO 499. The reason behind the move is to give protection to locally assembled HEVs.

What do you think about the removal of recent tax exemptions? Tell us in the comments section.