Govt Rejects Proposal to Increase Sales Tax on Small Cars in Budget

The federal government has decided not to increase sales tax on locally manufactured or assembled motorcars of cylinder capacity up to 850cc, top sources informed ProPakistani. Sources said the authorities have rejected earlier instructions to increase sales tax on small cars from 10-12.5 percent to 15-18 percent in the upcoming budget. It is possible that FBR will not remove entry number 72 of the Eighth Schedule of the Sales Tax Act 1990. This way, the concessionary sales tax regime on locally manufactured or assembled motorcars will remain. Meanwhile, the International Monetary Fund (IMF) has asked Pakistan to introduce a carbon levy on petrol, diesel, and vehicles with internal combustion engines above 850cc in the upcoming budget. The fate of this agenda will likely be finalized on Monday or Tuesday next week. According to the lender, the carbon levy has the potential to generate at least Rs. 25 billion every year by targeting petrol, diesel, and vehicles that use these fuels.