The government has increased the General Sales Tax (GST) on 1400cc or above cars from 18% to 25%.
The decision has been taken in line with the conditions set by the International Monetary Fund (IMF) for revival of the stalled loan programme for Pakistan and it will take the already skyrocketing car prices in Pakistan to new highs.
The move comes days after the government increased the General Sales Tax (GST) from 17% to 18% across the board on IMF’s instructions, and it would hit the Pakistani automotive industry hard that’s already struggling with the declining economy.
According to the notification, the new 25% GST will be applicable to locally manufactured or assembled SUVs and CUVs, locally manufactured or assembled vehicles having engine capacity of 1400cc and above, and locally manufactured or assembled double cabin (4×4) pick-up vehicles.
Apart from vehicles, the new GST will be applicable to several other items, including electronics, makeup products, pet food, shoes, imported ladies purses, shampoo, soap, lotion, headphones and speakers, iPod, doors and windows, bath fittings, tiles, sanitary ware, chandeliers and fancy lights.
The Pakistani automotive industry is already struggling due to restrictions on the import of Completely Knocked Down (CKD) kits and Honda Atlas Cars Pakistan Limited (HACPL) has shut down its production for the entire month of March.
