The federal government has hiked the General Sales Tax (GST) from 17% to 18%, effective immediately from February 15, 2023. The government has taken the step under the International Monetary Fund (IMF) demand. Under the chair of Prime Minister Shehbaz Sharif, the federal cabinet has approved Finance Supplementary Bill 2023 to implement the condition set by the global lender for the revival of derailed $ 6.5 billion program.
After getting approval from the cabinet, the Federal Board of Revenue issued the Statutory Regulatory Order (SRO) for hiking the GST rate by 1%.
Fresh Car Price Hikes?
Yes, we should expect another wave of car price hikes. Yesterday, post increasing car prices for the third time in a month, Indus Motor Company (IMC) did mention that “these indicative prices are purely provisional and are subject to change,” meaning the company was expecting the increase in GST.
Meanwhile, discussing another price increase due to new GST, one of the new entrants in the local industry told PakWheels that the car companies don’t have a choice. It is expected that most assemblers will increase prices today. In case of no announcement, they will receive the 1% extra GST from the consumers at the time of delivery because they have to, as taxes go straight to the government, and companies have no role in it.
Expected Increase in Other Taxes
Continuing the series of bad news, there are high chances that the government will also increase other taxes, including Capital Value Tax (CVT). Currently, CVT is 1%, and it is rumored that it might be increased to 2%; however, it has yet to be confirmed.
All in all, the situation is bleak, especially for the car industry, which is already suffering from the no Letter of Credit (LCs). The new taxes and duties will worsen the situation for car assemblers and consumers.
What is your take on the increase of GST from 17 to 18%? Please share your thoughts in the comments section.
