Budget 2023-24: Cars Above 2000cc To Be Expensive
Amidst the car industry’s struggle with declining sales and diminishing profits, the authorities have introduced new taxes. In the revised Finance Bill 2023, the government has recently raised the advanced income tax on vehicles with engine capacities exceeding 2000cc. These updated regulations encompass both imported and domestically produced vehicles ranging from 2001cc to over 3000cc in engine capacity.
Finance Bill 2023
As per the revised Finance Bill 2023, following will be the tax rates implemented for different vehicle engine capacities.
- There will be 6% tax will be imposed on the value of vehicles with engine capacities from 2001cc to 2500cc.
- Vehicles with engine capacities from 2501cc to 3000cc will face an 8% tax based on their value.
- Vehicles with engine capacities exceeding 3000cc will be subject to a 10% tax based on their value.
Under the amended Finance Bill 2023, the Customs department will evaluate the import value of cars with engine capacities exceeding 2001cc. This import value will be used to determine the applicable Customs Duty, Federal Excise Duty (FED), and Sales tax.
For both Completely Built-up (CBU) and locally assembled cars with engine capacities above 2001cc, the invoice value, which includes all duties and taxes, will be taken into consideration.
In situations where the engine capacity is not relevant, and the value of vehicles is Rs. 5 million or higher, a tax rate of 3% will be imposed on the import value (including the revised Customs Duty, FED, and Sales tax for imported vehicles) or the invoice value (for locally assembled vehicles).
If a locally manufactured vehicle is sold by the original purchaser before registration, the motor vehicle registering authority will levy taxes at the specified rates during the registration process. Moreover, manufacturers of motor vehicles are required to collect advance taxes from buyers at the specified rate during the sale of motor cars or jeeps.
Finance Bill 2022
- Vehicles up to 850cc will be subject to a tax of Rs. 10,000.
- Vehicles ranging from 851cc to 1000cc will incur a tax of Rs. 20,000.
- Vehicles with engine capacities between 1001cc and 1300cc will be taxed at Rs. 25,000.
- Vehicles falling in the 1301cc to 1600cc range will be liable for a tax of Rs. 50,000.
- Vehicles ranging from 1601cc to 1800cc will face a tax of Rs. 150,000.
- Vehicles falling in the 1801cc to 2000cc range will be taxed at Rs. 200,000.
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