Recent updates confirm that the government has implemented a 25% GST on cars priced higher than Rs. 40 lacs. In a fresh SRO 370 (I)/2024, the Ministry of Finance and Revenue has announced amendments to its previous notification No. SRO 297(I) 2023, issued on March 8, 2023.
According to the updated regulations, the 25% GST will apply to:
- Locally produced or assembled vehicles with engine capacities of 1400cc and higher.
- Locally manufactured or assembled vehicles exceeding an invoice price of Rs. 4 million (excluding sales tax).
- Locally manufactured or assembled double cabin (4x) pick-up vehicles.
It is worth noting that cars with engine capacities of 1400cc and above are already subject to a 25% GST. The second point of this SRO is significant as it indicates that vehicles priced over Rs. 40 lacs will now have a 25% sales tax, excluding the sales tax itself.
The exclusion of sales tax in the calculation means that only certain variants, like the Swift GLX, will fall under this new tax bracket, despite their prices exceeding Rs. 4 million. The impact on other models such as Honda City, Toyota Yaris, and Proton Saga remains to be seen pending announcements from respective companies.
