Budget 2024-25 – Proposed Taxes on Local & Imported Cars
Finance Minister Muhammad Aurangzeb presented the fiscal budget 2024-25 today in the National Assembly. During his speech, the minister announced various new taxes and duties on different sectors, including the automotive industry. Earlier, reports suggested that the regulatory duty (RD) would be increased from the current 70% to 100% on cars with engines above 1800cc, while 15% was expected on cars with engines up to 1800cc.
New Taxes on Cars
During his speech, the finance minister stated:
- Due to new technology, the difference between petrol and hybrid cars was too huge, and that is why an import concession on Custom Duty for hybrid cars was offered in 2013. But now, the local assembly has been started, and to give a boost to local industry, the concession is being taken back. According to FBR, “50% exemption from duty & taxes is admissible on import of Hybrid Electric Vehicles (HEVs) of engine capacity up to 1800cc and 25% exemption from duty & taxes is admissible on import of HEVs of engine capacity from 1800cc to 2500cc.”
- Also, the finance minister proposed withdrawing the tax exemption on electric cars costing above $50,000, meaning high-level EVs will be affected. “The people who buy these cars can pay the taxes and duties on such vehicles,” the finance minister mentioned.
- Under the current law, the Advance Tax on locally assembled cars up to 2000cc was received based on engine capacity. However, car prices have increased considerably, and to take full advantage of the tax’s potential, the government is proposing that tax will now be imposed on car prices instead of engine capacity.
These are major proposals from the government for the automotive industry. We will provide more information as the picture gets clearer and the details of the taxes are explained by the government.