Govt announces reduced taxes for cars under 850cc in Budget 2021-22

The Federal Government has announced reduced taxes for cars under 850cc in the Annual Budget 2021-22, which will hopefully lead to a reduced prices of these vehicles.

Taxes Cars 850cc — Govt announces reduced taxes for cars under 850cc in Budget 2021-22.

Speaking at the National Assembly, the Federal Minister Shaukat Tareen said that the 2.5% Federal Excise Duty (FED) will no longer be charged on locally assembled cars under 850cc while the sales tax on these vehicles have also reduced to 12.5% from the earlier 17%.

Pak Suzuki Motor Company, Regal Motors (Prince Automobiles) and United Motors are currently the only three companies in the country that are assembling vehicles with an engine capacity of 850cc or less, which means that the new Budget 2021-22 will lead to reduction in prices of these vehicles by Rs. 120,000.

It means that prices of Suzuki Alto, Prince Pearl and United Bravo, which are the only three cars under 850cc being assembled in the country will be reduced after tax reduction on these vehicles as per the Budget 2021-22.

New Auto Policy

It is pertinent to mention that the new auto policy which was presented earlier, the government aims to reduce car prices to enable middle class of the country to buy them while encouraging local assembly and production along with export of vehicles.

The new auto policy will have significant impact on localization of parts, productivity and revenue collection, which will benefit all stakeholders involved, which includes the customer, manufacturer and government.

It bears mentioning that the Automotive Development Policy (2016-2021) will also expire at the end of this month. This policy has lead to new companies entering the local automotive industry leading to increased competition in the sector.

Meanwhile, the government is focusing on electric vehicles and there are massive tax relaxations proposed in the Budget 2021-22 in order to support entrance of EV in Pakistan.

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