The Finance Bill 2024 has ushered in a new era for vehicle taxation in Pakistan, moving away from fixed tax rates to a value-based system that aligns taxes more closely with the value of the vehicle. Effective today, these updated tax rates will impact the pricing of locally manufactured vehicles across various engine capacities:
- Vehicles up to 850cc will now face a tax rate of 0.5%, replacing the previous fixed tax of Rs10,000.
- Cars ranging from 851 to 1000cc will be taxed at 1%, instead of the former Rs20,000 fixed tax.
- For vehicles between 1001 and 1300cc, the tax rate increases to 1.5%, replacing the earlier Rs25,000 fixed tax.
- Cars from 1301 to 1600cc will incur a tax rate of 2%, up from the previous Rs50,000 fixed tax.
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- Vehicles in the 1601 to 1800cc range will now be taxed at 3%, previously fixed at Rs150,000.
- Cars between 1801 and 2000cc will face a 5% tax rate, up from Rs200,000.
- For vehicles from 2001 to 2500cc, the tax rate has been significantly increased to 7%.
- Cars in the 2501 to 3000cc range will see a tax rate of 9%.
These changes are part of the government’s efforts to enhance revenue collection, reflecting a broader fiscal strategy. The shift to value-based taxation aims to adjust taxes according to the vehicle’s worth, potentially impacting consumer costs significantly. As these new rates come into effect, stakeholders in the automotive industry and consumers alike will closely observe how the market responds and adapts to these regulatory adjustments.
