Capital Value Tax Imposed on Cars Above 1300cc

So, there is an update regarding Capital Value Tax (CVT) for you guys, and this one is not so good. Before telling you the new update, here is a brief recap of this tax. In Finance Bill 2022-23, the government announced 2% CVT on cars above Rs. 5 million. But, in the final Finance Act 2022, the Federal Board of Revenue (FBR) reduced it to 1%. You can read about it in detail here. 

But There is a Twist

But it seems there is a twist in it. According to Finance Act 2022, the CVT has been applied, but the Federal Board of Revenue (FBR) has changed the conditions. Now, CVT will be imposed on: 

• Cars with an engine size above 1300cc
• Electric vehicles with battery power above 50kwh

So, this means there is no condition of Rs. 5 million; rather engine size matters now. Apparently, the government did reduce the CVT to 1% from the proposed 2%, but it included more cars/consumers in this new tax net. Now, the buyers of cars above 1300cc have to pay this extra tax. Well played, FBR, well played! 

This new tax will impact even cars like:

• Changan Alsvin
• Toyota Yaris
• Kia Stonic
• Toyota Yaris
• Honda City (1.5L CVT, 1.5L Aspire M/T, & 1.5L Aspire CVT) 

And obviously Honda Civic, Toyota Corolla, Kia Sportage, Hyundai Tucson, and others. 

All in all, this new tax is going to hit almost every consumer except Suzuki’s because the company doesn’t offer any car above 1300cc. Also, this new tax will result in a price hike for all the cars mentioned above, meaning more problems for the buyers as they will find it hard to buy a new car. 

What do you think about this new tax named CVT? Do you think it will further impact the buying power of consumers? Please share your thoughts in the comments section.