In a significant shift, the federal government has decided in the 2024-25 budget to levy advance taxes on the purchase and registration of vehicles based on their price rather than engine capacity.
According to the budget document, under the current law, advance taxes on the purchase and registration of vehicles up to 2,000 cc are collected based on engine capacity.
The government argues that since there has been a considerable increase in vehicle prices, it is now proposed that taxation for all motor vehicles be based on their price rather than engine capacity. This move aims to align taxation more closely with the actual cost of the vehicle.
This decision marks a departure from the traditional method of taxation and reflects the government’s effort to adapt tax policies to the changing economic landscape. It is anticipated to have far-reaching implications for the automotive industry and consumers alike.
By shifting the tax burden from engine capacity to vehicle price, the government seeks to ensure a fairer and more transparent taxation system while also potentially generating additional revenue to support various developmental initiatives outlined in the budget.
This move is expected to have both supporters and detractors, with stakeholders closely monitoring its impact on the automotive market and overall tax collection.
