Huge tax cut for small vehicles

Staff Reporter

The 2021-22 budget has been released, indicating several upcoming policy changes. The government has abolished Federal Excise Duty (FED) on locally assembled vehicles with an engine displacement of 850cc or less. The said Duty rate was 2.5% prior to the development.

In the session, Federal Finance Minister Shaukat Tareen further informed that sales tax on the said segment of cars has also been brought down from 17% to 12%, resulting in a 4.5% of reduction in tax rates.

Companies such as the Pak Suzuki Motor Company (PSMC), Regal Motors, and United Motors are the only companies that currently assemble and sell vehicles with an engine capacity of 850cc or less, which implies that their prices should now be reduced by approximately Rs. 150,000.

Reportedly, the Chairman of the All Pakistan Motor Dealers Association (APDMA), HM Shehzad, recently requested the government to make changes in the new auto policy that will be implemented after the introduction of the 2021-22 budget.

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