Overview
Cars over 2000cc engine capacity become more expensive after the amended bill passed under the Fiscal Budget 2023-24. The government has made significant changes in vehicle taxes under the budget. As per the amended Bill 2023 Advanced Income Tax has increased on the registration of over 2000cc vehicles. The purpose of significant change in luxury car registration is to increase government income. Luxury cars are already expensive in Pakistan. Import restrictions and devaluation of rupee value has made the price of these cars unexpectedly higher. But lovers of these car never stop buying these cars. The increase in tax probably made effect on sale of these vehicles.
New Tax Slab Implementation For 2000cc to 3000cc and Above
According to the amended Finance Bill 2023, fixes percentage of tax for imported and locally manufactured vehicles announced. The details of tax slabs will work as:
- The first slab of tax for cars with engine capacity of 2001cc to 2500cc is fix at 6% on the value of the vehicle.
- The second slab announced for the engine capacity over 2501cc to 3000cc and the tax percentage would be 8% on the value of the vehicle.
- The third slab is for vehicles having engine capacity over 3000cc and fix tax for these vehicles is 10% on the basis of the value of the vehicle.
Under section 231B of the Income Tax Ordinance 2001, advanced tax has been collected on motor vehicles. Advanced Income Tax shall be collected at the time of registration by the registration authority of the Excise and Taxation Department at the specified rates.
Conclusion
The increase in tax will bring car prices up. This might affect car sales because buyers should have to calculate the additional tax amount. It is important as well to calculate the total amount inclusive the additional tax announced for 2000cc and above vehicles. The amended Finance Bill imposed on imported and locally assembled 2000cc or above vehicles. Meanwhile, automakers were already concerned about new tax in the budget. They announced special offers to customers before the budget has announced.
