ISLAMABAD: The “already suffering” auto sector would be negatively impacted by the Federal Board of Revenue’s (FBR) decision to levy a 25% sales tax on cars that are assembled or manufactured domestically if the invoice price exceeds Rs4 million.
According to a notice sent by the FBR on Friday, locally built or assembled cars with engines larger than 1400cc will still be subject to 25% sales tax. During the previous caretaker government, the federal cabinet and the Economic Coordination Committee (ECC) approved the imposition of a 25% general sales tax (GST) on all locally built vehicles costing more than Rs4 million, having an engine size of more than 1400cc, or having a double cabin. Pakistani automakers expressed regret over the move, pleading with the government to reverse the hiked sales tax, claiming that it would only impact home automakers and not used car importers.
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According to estimates from the FBR, these taxes measures will bring in between Rs4 and Rs4.5 billion a year. The FBR report, which levied a 25% GST on all cars with displacements greater than 1400cc, was accepted by the ECC. However, the FBR also stipulated that all cars priced more than Rs 4 million and with displacement greater than 1400cc will be subject to a 25% GST.
Pakistani automakers expressed regret over the move, pleading with the government to reverse the hiked sales tax, claiming that it would only impact home automakers and not used car importers.
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According to estimates from the FBR, these taxes measures will bring in between Rs4 and Rs4.5 billion a year. The FBR report, which levied a 25% GST on all cars with displacements greater than 1400cc, was accepted by the ECC. However, the FBR also stipulated that all cars priced more than Rs 4 million and with displacement greater than 1400cc will be subject to a 25% GST.