The government of Pakistan is considering on reducing taxes on new imported and locally assembled cars of up to 800cc engine capacity in the next budget aimed at bringing these within the purchasing power of the middle class.
The proposal, seeks to cut import duties and taxes on new imported cars by up to 63% and reduce them by nearly 7% for locally made cars.
The proposal includes abolishing 50% regulatory duty, either eliminating 7% additional customs duty or reducing the customs duty by the same percentage and abolishing 2.5% federal excise duty on new imported cars, the sources said.
In addition to that, there is also a proposal to abolish 5% withholding tax and reduce the standard general sales tax (GST) rate of 17% to 12% on the import of new cars of up to 800cc, they added.
The existing combined taxes and duties on new imported cars of up to 800cc are about 132% of the price which, if this proposal is implemented, will come down by 63% of the value of imported cars, said the sources.