Budget 2021-22: Pakistan slashes taxes on small, electric cars

01:22 PM | 11 Jun, 2021
Budget 2021-22: Pakistan slashes taxes on small, electric cars

ISLAMABAD – The federal government on Friday slashed sales tax on locally manufactured cars from 17 percent to 12.5 percent.

This was announced by Finance Minister Shaukat Tarin during his budget speech amid ruckus by opposition inside and protests by the employees outside the lower house of Parliament.

The minister announced that the government slashed sales tax on locally manufactured cars from 17% to 12.5%. He also announced abolishing value added tax on locally manufactured vehicles. He said that the federal government also decided to waive off federal excise duty on 850cc vehicles.

The government also announced slashing sales tax on electric vehicles from 17 percent to 1 percent.

He said federal excise duty is being removed from cars up to 850cc while value-added tax (VAT) on these is being removed. "To support electric cars, the government of Pakistan wants to support manufacturing of electric cars for which a lot of tax relaxations are being given."

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It has also been expected to lower taxes on brand new motorcycles and on new models of tractors. It is proposed to cut sales tax, excise duty and additional customs duty on small cars which might bring the prices of these vehicles down and boost their sales.

The automobile manufacturing companies have failed to decrease the prices of the cars despite a visible decrease in the dollar rate in the last few months. It has been a practice in Pakistan that prices of goods go up with the rise in dollar price but vice versa is not true.

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