Budget 2022-23 – Extra Tax on Cars Worth Over Rs. 50 Lacs
Although there was no mention in Finance Minister Miftah Ismail’s budget speech, the Finance Bill 2022 document has revealed a new tax on cars. According to the document, the government has proposed Capital Value Tax (CVT) on vehicles with price over Rs. 5 million (50 lacs).
CVT Percentage
The Finance Bill mentions that 2% CVT of the value of the car will be implemented on these cars. This means that the car with a price tag of Rs. 50 lacs or above will get affected, resulting in price increase.
Furthermore, it seems that CVT is applicable on both filers and non-filers and it is most probably non-refundable. Moreover, the tax will also be collected at time of transfer from one buyer to another seller. And the value of vehicle will be reduced by 10% each year. Lastly, the CVT will remain applicable until the market value of vehicle remain above Rs. 5 million.
The government has also proposed CVT on CBU/imported vehicles, however, the import is currently banned, hence, it is not relevant at this point.
Effected Cars & Companies
If CVT is implemented, the prices will go up and companies including Toyota Indus Motors, Honda Atlas, Kia Lucky Motors and Hyundai Nishat will be affected. Meanwhile, prices of cars like Honda Civic, Proton X70, Peugeot 2008, Kia Sportage, Hyundai Tucson will probably go up.
In hindsight, this doesn’t seem to be a good policy as the prices of cars have already going up for couple of years. This new tax will lead to another jump, increasing the burden on consumers. Let’s see whether this finance bill is passed by the National Assembly or not, so hope for the best.
What do you think about the proposed taxes? Do you think it will further increase the prices? Please share your thoughts in the comments section.
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