850 CC cars prices down by Rs 200,000 in budget

The government on Friday announced different tax measures that will reduce the prices of 850 CC cars by Rs 200,000 in the budget for low-income groups.

Now, low-income groups will be able to buy cars at low prices after approval of tax measures in budget 2021-22.

However, the government announced to increase in taxes on luxury cars to increase prices. The reduction in taxes for small cars will help the low-income group to buy them.

During recent years, car prices had gone up manifold due to the depreciation of the rupee against the dollar. As a result, they were now beyond the reach of Pakistani consumers.

The government has reduced custom duty from 30 to 15 percent, exempted additional custom duty and regulatory duty on cars up to 850 CC.

In a briefing on Friday, FBR authorities said that these tariff rationalization measures would reduce the prices of 850 CC cars up to Rs 200,000.

Electric Vehicle

The government has also announced to reduce duties on electric vehicles that will result in reducing prices of electric cars. In addition, it decided to reduce customs duty from 25 to 10 percent in budget 2021-22.

However, the government has increased taxes on luxury cars, resulting in higher prices and luxury goods in the new budget.

The federal budget 2021-22 proposes different rates for locally manufactured vehicles and electric vehicles. Under the Finance Bill 2021-22, sales tax on locally manufactured cars or electric cars and four-wheelers will be at the rate of one percent.

It also proposed to impose this rate till 2026 and small cars or SUVs, which will also impose one percent sales tax on 50 kW batteries or more minor or light commercial vehicles and locally manufactured. Vehicles or motor vehicles assembled in Pakistan with up to 850 ccs will be subject to sales tax at the rate of 12.5%.

The government will also impose a tax on imported and locally manufactured hybrid electric vehicles under the Finance Bill at 8.5% at 1800 cc Hybrid electric vehicles from 1801 cc to 2500 cc at 12.75%.