FBR Raises Sales Tax on Motor Vehicles to 25%

The Federal Board of Revenue (FBR) in Pakistan has increased sales tax on certain motor vehicles in an attempt to generate more revenue and discourage the purchase of luxury items. This move comes with concerns from the automotive industry about its potential negative impact.

Key Points:

  • New Tax Rate: Sales tax on specific categories of motor vehicles is now 25%, up from the standard rate of 18%.
  • Applicable Vehicles:
    • Locally manufactured vehicles with engine capacity exceeding 1400cc.
    • Locally manufactured vehicles priced above Rs 4 million (excluding sales tax).
    • Locally manufactured double cabin pickup trucks.
  • Industry Concerns:
    • The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) fears a significant price increase, potentially reaching Rs 4 million or more.
    • PAAPAM argues previous tax hikes and currency devaluation have already caused a drastic decline in car sales (down to 30% of 2021-22 levels).
    • They highlight additional challenges like high energy prices, currency devaluation, high financing rates, and existing taxes (over 40% on each car).
  • Overall Impact:
    • Concerns exist about potential job losses, reduced tax collection due to lower sales, and a general decline in the automotive industry’s health.

Looking Ahead:

Stakeholders in the automotive industry are expected to engage with authorities regarding the new tax rates. The industry braces for potential ramifications as the situation unfolds.


  • This article is based on the information provided and does not endorse any specific viewpoint.
  • It is recommended to consult reliable sources for the latest updates on this topic.

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