Pakistani cars may get cheaper after the budget 2021. It may be a good news as the local cars may get cheaper after the budget. A significant increase was there in car prices in the last two years. For instance, a simple Honda City car would cost around PKR 1.8 million in early 2019. However, the price of the same car has gone up to PKR 2.4 million currently. Moreover, the prices of Sedan cars have also moved up significantly. The prices of Sedan cars have raised into millions.
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Similarly, the impact was also seen in the 800cc and 1000 cc cars. A car costing PKR 5 lacs have risen to PKR 8-9 lacs currently. Thus, there is a strong need of bringing the prices of smaller cars down.
Proposal for lowering duties
Pakistani automotive industry is flooded with the new automakers. Although it has been a positive development for the industry, people are still yearning for more affordable cars in the market.
According to current news, the government is considering dropping taxes on vehicles with an engine transposition of 800cc or less in order to ease people from the mid-tier socio-economic class. This decision will be confirmed upon the depiction of the 2021 budget.
A proposal for this development is under progress, but the new policy seeks to reduce the import duties and taxes on the aforesaid category of cars by up to 63 percent, and only for the new imported cars. On the other hand, the plans for the locally developed vehicles are to decrease the taxes to seven percent.
Whereas the proposal suggests the abolishing of the 50 percent in regulatory duties, seven percent in customs duties, and 2.5 percent in federal excise duties. The offer draft also suggests a deferral of five percent on withholding tax, and a reduction in the standard sales tax (GST) from 17 percent to 12 percent on the import of cars with up to 800cc engine supplanting.