Budget FY2022-23: More Taxes Imposed on New Cars

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The newly formed coalition government has unveiled the “toughest” federal budget for the fiscal year 2022-23 in the National Assembly with an outlay of Rs 9.5 trillion amid strict conditions of the International Monetary Fund (IMF) for the revival of the $6 billion loan program stalled since months.

Among several budget proposals, the highlights of those related to the auto sector include a proposed advance tax of 200% on the purchase of new cars with engine displacements of more than 1,600cc. According to information, government has increased the advance tax on the aforementioned vehicles by 100% for non-filers only. However it will have no impact on the car’s price tag, but will benefit the government in collecting more taxes from people.

Cars that will be affected by the above proposal include, Toyota Corolla, Hyundai Elantra, Hyundai Sonata, Kia Sportage, Hyundai Tucson, BAIC BJ40 Plus, Kia Sorento, Toyota Hilux, Isuzu D-Max and Toyota Fortuner. Additionally, the government will also charge a 2% additional advance tax from the buyers of luxury electric vehicles (EVs). The budget proposals however, will need to be approved by National Assembly before they are implemented. 

Meanwhile, to support the local auto industry & to preserve the outflow of reserves, all kinds of vehicle import whether new or used is already banned. The government says it wants to maintain the auto sector’s existing progress while also urging the industry to totally indigenize car and component production.

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