Budget 2025-26: Alto Price Increased by Rs.186,446

The federal government has proposed an increase in General Sales Tax (GST) from 12.5% to 18% on vehicles up to 850cc, a decision impacting the Suzuki Alto, the only locally assembled brand-new vehicle available in this category in Pakistan.

Alongside this GST increase, the government has also introduced an additional 1% Green Tax on cars upto 1300cc. This new tax is designed as an environmental penalty targeting vehicles equipped with internal combustion engines (ICE), which contribute to air pollution.

If the proposed bill is approved, Suzuki Alto buyers would see prices rise. Customers are expected to face an increase ranging between Rs. 163,230 and Rs. 190,000, varying slightly according to the specific variant. This increase comprises both the higher GST rate and the new 1% environmental tax.

Here’s the table for quick summary:

Carbon Tax

Additionally, the government has introduced a carbon tax set at PKR 2.5 per liter on fuel consumption. This carbon tax is a penalty specifically aimed at discouraging the use of vehicles with traditional internal combustion engines, which produce higher carbon emissions. By imposing this tax, the government intends to encourage consumers to transition towards cleaner transportation alternatives, including hybrid-electric vehicles (HEVs) and fully electric vehicles (EVs). The primary goal behind this initiative is to reduce air pollution and lower the country’s overall carbon footprint, aligning with global efforts to combat climate change.

Understanding the New Green Tax on Vehicles

This tax is straightforward, calculated as a percentage of a vehicle’s total price, inclusive of existing taxes and duties. It varies according to both the engine size of the vehicle and whether it is locally manufactured or imported.

Vehicles with engines under 1300cc, whether locally produced or imported, will attract a 1% tax. For instance, a car priced at Rs. 100,000 would incur an additional Rs. 1,000 tax. Cars with engines between 1300cc and 1800cc will be taxed at a rate of 2% of their price. Larger vehicles with engine capacities over 1800cc will incur a higher tax of 3%. Commercial vehicles, including buses and trucks, will also have a tax applied, regardless of whether they are imported or assembled locally.