Ladies and Gentlemen, this is your news provider speaking; brace for impact as the government has officially imposed 25% General Sales Tax (GST) on 1400cc and above cars, Sports Utility Vehicles (SUVs), Crossover Utility Vehicles (CUVs), and 4×4 double cabin vehicles. Meaning except for Suzuki Pakistan, every car company will have to hike the prices, and this would be the third or fourth price increase of 2023, which by the way, is only in its third month.
GST – From 17% to 25%
Earlier, the companies hiked the rates for multiple reasons, including the depreciation of Pakistani rupee against the USD, non-issuance of Letters of Credit (LCs) by the State Bank of Pakistan, and 1% extra GST. In the Financial (Supplementary) Act 2023, Finance Minister Ishaq Dar announced that GST would increase from the previous 17% to 18% on all items. Following this, all the companies, including Toyota, Honda, Kia, and Hyundai, announced new prices of their cars, some even twice.
In his speech, the finance minister also announced 25% GST from 17% on all luxury items. Somehow the government believes that cars with 1400cc engines and CUVs – one with a 1200cc engine – are luxury items. Hence, the Federal Board of Revenue (FBR), in its new SRO 297(1)/2023, has officially implemented this new tax on 1400cc and above cars, SUVs, CUVs, and 4×4 double-cabin vehicles.
As per our sources, the companies have started calculating the new prices after this tax and they will announce them today or tomorrow.
The government has imposed this new tax to fulfill the requirements for the next loan installment of the International Monetary Fund (IMF). And it will now cause price hikes in millions, meaning more expensive cars, low sales, and above all, out of reach for the masses; the circle continues. As we have mentioned earlier on multiple occasions, the situation seems to get bleaker with every passing day as the economy is still unstable, the rupee is not stabilizing, and with these new taxes, it will go from bad to worse.
What is your take on this new 25% GST? Who is responsible? Please share your thoughts in the comments section.
