ISLAMABAD – The Economic Coordination Committee (ECC) of the Cabinet has approved a proposal put forward by the Federal Board of Revenue for increasing the sales tax rate on locally manufactured or assembled vehicles.

Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar presided over the ECC meeting, which was attended by Minister for Privatization and Inter-Provincial Coordination Fawad Hasan Fawad, Minister for Interior, Commerce & Industries Mr. Gohar Ejaz, Minister for Energy and Petroleum Division Mr. Mohammad Ali, Minister for Planning, Development and Special Initiatives Mr. Sami Saeed, Minister of Maritime Affairs, Communication and Railways Shahid Ashraf Tarar and others.

The ECC considered the proposal of the Federal Board of Revenue (FBR) regarding the “Rationalization of Criterion of Enhanced Rate of 25% Sales Tax on Locally Manufactured/ Assembled Vehicles (PCT87.03)”.

The proposal was approved after a detailed discussion, according to an official press release issued after the meeting.

The decision would further jack up the prices of the locally manufactured vehicles, which saw a decline in their sales in the first seven months of running the fiscal year 2023-24.

These Vehicles Likely to Get Expensive

The Pakistan Customs Tariff Code 87.03, which has been mentioned in the official press release, states that “motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars” fall under this category.

A social media user claimed that the decision would increase the prices of vehicles with engine capacity above 1000cc.

He said previously 18 percent tax was collected on the vehicles that fall under this category.

The prices of Honda City, Civic, Toyota Yaris, Toyota Corolla, and other vehicles are likely to go up once the new criteria is approved by the federal government.