Budget 2024–25: Proposed Taxes On Local & Imported Cars

Finance Minister Muhammad Aurangzeb presented the fiscal budget 2024–25 in the National Assembly on June 12, 2024. In his speech, the minister announced various taxes and levies in various sectors, including the automotive sector. Earlier in the news, the regulatory duty (RD) is expected to increase from the current 70% to 100% for cars with engines above 1800 cc and 15% for cars with engines up to 1800 cc.

Budget 2024–25: New Taxes on Cars

The finance minister stated in his speech:

• Due to the new technology, the difference between petrol cars and hybrid cars is big, and therefore, in 2013, an import exemption from customs duty was offered for hybrid cars. But now the local assembly has started, and to strengthen the local industry, the concession has been taken back. According to FBR, “50% exemption from duty & taxes is admissible on import of Hybrid Electric Vehicles (HEVs) of engine capacity up to 1800 cc, and 25% exemption from duty & taxes is admissible on import of HEVs of engine capacity from 1800cc to 2500 cc.”
• The finance minister has also proposed withdrawing tax breaks for electric cars priced above $50,000, meaning high-end EVs will be affected. “The people who buy these cars can pay the taxes and duties on such vehicles,” the finance minister said.
• As per the current law, an advance tax has been levied on locally assembled cars up to 2000 cc, depending on the engine capacity. However, car prices have risen significantly, and taking full advantage of the tax potential, the government now proposes to tax car prices instead of engine capacity.

This is the government’s main recommendation for the car industry. We will provide more information once the picture is clearer and tax details are clarified by the government.

For more information, please visit government’s official website Federal budget 2024-25.

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