25% Sales Tax Slapped on Local Assembled Vehicles

The Economic Coordination Committee (ECC) has approved a 25% sales tax on locally manufactured vehicles. This would be applied to domestically produced cars under the approved rules, which will affect cars with engines not larger than 1,400 cc and those costing more than Rs 4 million. Vehicles below the aforementioned criteria will continue to get a standard rate of 18%.

Though intended to increase government revenue, these actions will severely hurt consumers who are already suffering from inflation as well as the local auto industry which is battling with depleting sales volume.

The Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar presided over a meeting of the Economic Coordination Committee (ECC) of the Cabinet at Islamabad dated February 14th, 2024. pic.twitter.com/AjBUV9EOB4
— Ministry of Finance, Government of Pakistan (@Financegovpk) February 14, 2024

A number of locally assembled cars, even those with 1,000cc engine displacement will be affected. These include Suzuki Cultus VXL & AGS variants, Proton Saga Ace, all variants of Suzuki Swift, all 1.2L variants of Honda City, and all 1.3L variants of Toyota Yaris. A formal notification is expected to be issued by the government in the forthcoming days.