GST on cars with over Rs4m price raised to 25pc

ISLAMABAD: The FBR has slapped 25 percent Sales Tax on locally manufactured or assembled cars if invoice price exceeds Rs4 million.

According to the FBR notification on Friday, 25pc Sales Tax would continue to be applicable on the locally manufactured or assembled vehicles having engine capacity of 1400cc and above.

The ECC and the federal cabinet during the tenure of former caretaker government had granted approval for slapping 25pc General Sales Tax (GST) on all vehicles manufactured locally with price above Rs4 million or above 1400cc engine capacity or double cabin.

The FBR has estimated to collect Rs4 to Rs4.5 billion through these taxation measures on annual basis.

The ECC had approved the summary of FBR under which all vehicles above 1400cc were imposed 25pc GST. But, the FBR added another condition that all vehicles above 1400cc having a price over Rs4 million would have to pay 25pc GST.

Earlier, the vehicles above 1400cc engine capacity were paying 25pc GST. But now the element of price was also incorporated, so vehicles having price more than Rs4 million would have to pay 25pc GST instead of 18pc. However, for those vehicles up to 850cc the GST rate was fixed at 12.5pc.

The government had imposed an enhanced GST rate of 25pc on luxury vehicles in the last budget on those vehicles having engine capacity above 1400cc.

The enhanced GST rate is applied in different countries to curb luxury vehicles, and in some countries the rate was even on the higher side, said FBR official.