The Federal Board of Revenue (FBR) has announced the imposition of a 25% General Sales Tax (GST) on luxury items, including imported and locally assembled cars with engines that are 1800cc and above. As a result of the Finance (Supplementary) Bill 2023, this decision has been made public.
The move will affect a list of locally assembled cars, such as the Toyota Fortuner, Toyota Hilux Revo, Kia Sportage, Kia Sorento, Hyundai Tucson, Hyundai Sonata, Hyundai Elantra (GLS), Haval H6 2.0T AWD, and BAIC BJ40 Plus. The new tax regime has been approved and will be implemented shortly.
The recent announcement will undoubtedly result in another price increase for the auto industry in Pakistan, which has recently seen several price increases. As soon as the tax is put into effect, local automakers are predicted to raise their prices. In the coming days, the price of cars will continue to rise as a result of the strengthening dollar’s exchange rate against the Pakistani rupee.
The new Honda Civic has some good news for prospective car buyers, though. The car’s 1500cc engine means that it will not be subject to the new tax system. Other customers looking to purchase a car from the above list will need to prepare themselves for a significant price increase.
The automobile industry is expected to be significantly impacted by the 25% GST on luxury goods, which will have an effect on both car manufacturers and consumers. The FBR’s action is intended to boost revenue, reduce the import of opulent goods, and support local production. It is anticipated that the new tax will level the playing field for locally produced and imported vehicles..
As a result of the imposition of a 25% GST on luxury items, including cars with 1800cc engines and above, Pakistan’s automotive industry is expected to experience another round of price increases. The consumers looking to buy the affected vehicles will be impacted by the price increase that the automakers are predicted to announce in the upcoming days. The action is a component of the government’s initiative to encourage domestic production and boost revenue.
