Govt Announces Tax Exemptions for 1000cc Cars

Federal Minister for Finance Shaukat Tarin in a National Assembly session held today has announced that up to 1,000cc vehicles will be exempted from taxes in the federal budget for FY2021-22.

Earlier, the Finance Bill which was presented in the National Assembly on the 12th of June originally proposed tax measures for vehicles up to 850cc under the Customs Revenue Measures and suggested exemption of Additional Customs Duty (ACD) and Regulatory Duties (RD) and reduction of Customs Duty (CD) from 30% to 15%. For Completely Built Units (CBU), it was proposed to reduce CD from 25% to 10% while for local manufacturing from 12.5% to 5%.

Related: Govt Considering Tax Relief to Make Up to 1000cc Cars Affordable

However there was a huge demand to include up to 1000cc cars in the tax exemptions due to very limited options available in the sub 850cc category. Now with the expansion of tax reliefs on up to 1000cc cars, the likes of Suzuki Wagon R, Cultus, Kia Picanto, United Alpha, Changan Karvaan etc are likely going to benefit and will result in a considerable reduction in prices favoring the end consumers.

Furthermore the registration fee and motor vehicle tax on electric vehicles (EVs) has also been abolished, however this exemption is only applicable for 2- and 3-wheeler EVs and heavy commercial electric vehicls. The incentives on 4-wheel EVs (passenger cars) will be announced in the upcoming auto policy, which will encompass electric vehicles too.

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