Overview
Yesterday Finance Minister Ishaq Dar address a Fiscal Budget 2023-24 speech at National Assembly. During the speech minister explained the taxes and duties for automobile sectors.
The budget announcement cleared all the doubts regarding increasing taxes and duties. Before the announcement rumors about tax increases on local cars spread which increase the concerns of automakers. Budget announcement always impacts on automotive sector’s move in the country.
Taxes on Cars in Budget 2023-24
During his speech, he explained:
- A duty and taxes cap imposed on Asian Make old and used vehicles up to 1800cc. In the new budget 2023-24 these taxes and cap is limit lifted for above 1300cc cars.
- The tax cap will remain on 1300cc cars.
Besides this, under the FBR S.R.O 577(I)2005, Asian Makes old and used cars are exempted from custom-duty, sales tax, and withholding tax. As it is specified in the following table.
Explanation of the Above Announcement
Prior, the government was collecting a fixed amount of dollars in taxes. The original market price of the car doesn’t link with it. just like taxes for Honda Fit, Aqua, and Vitz receives at the same dollar rate. But in the new announcement, the government will charge taxes as per the original market ex-factory price.
Is CVT on 1,000cc Cars Increase?
Rumors spread that the government will increase in Capital Value Tax (CVT) on 1,000cc and above cars. It is to remind you that there was already a 1% CVT on cars above 1,300cc engine capacity. In the previous Fiscal Budget, the government suggested a 2% CVT on cars above Rs. 5 million in value. meantime, FBR revised the budget and make it 1% CVT on cars above 1,300cc. The statement will keep going in the same way. However, the government also applied tax on EVs with batteries over 50KwH.
