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New Taxes on Vehicles: Impact and Implications

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New Taxes on Vehicles: Revised Finance Bill 2023

New Taxes on Vehicles: Revised Finance Bill 2023

Amidst the car industry’s struggle with declining sales and diminishing profits, the authorities have introduced new taxes. In the revised Finance Bill 2023, the government has recently raised the advanced income tax on vehicles with engine capacities exceeding 2000cc. These updated regulations encompass both imported and domestically produced vehicles ranging from 2001cc to over 3000cc in engine capacity.

Tax Rates for Different Vehicle Engine Capacities:

  • Vehicles up to 850cc: Rs. 10,000 tax
  • Vehicles ranging from 851cc to 1000cc: Rs. 20,000 tax
  • Vehicles with engine capacities between 1001cc and 1300cc: Rs. 25,000 tax
  • Vehicles falling in the 1301cc to 1600cc range: Rs. 50,000 tax
  • Vehicles ranging from 1601cc to 1800cc: Rs. 150,000 tax
  • Vehicles falling in the 1801cc to 2000cc range: Rs. 200,000 tax
  • Vehicles with engine capacities from 2001cc to 2500cc: 6% tax based on value
  • Vehicles with engine capacities from 2501cc to 3000cc: 8% tax based on value
  • Vehicles with engine capacities exceeding 3000cc: 10% tax based on value

Import Value and Taxation:

Under the amended Finance Bill 2023, the Customs department will evaluate the import value of cars with engine capacities exceeding 2001cc. This import value will be used to determine the applicable Customs Duty, Federal Excise Duty (FED), and Sales tax.

For both Completely Built-up (CBU) and locally assembled cars with engine capacities above 2001cc, the invoice value, which includes all duties and taxes, will be taken into consideration.

In situations where the engine capacity is not relevant, and the value of vehicles is Rs. 5 million or higher, a tax rate of 3% will be imposed on the import value (including the revised Customs Duty, FED, and Sales tax for imported vehicles) or the invoice value (for locally assembled vehicles).

Share Your Opinion:

What do you think about the newly-imposed taxes? Drop your thoughts in the comment section.

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