budget 2021/ car price reduced/car price after budget/pf car

budget 2021

tax Reductions

about ev

The federal government presented Fiscal Budget 2021-22, and there are some good news for the auto industry. While addressing National Assembly, Federal Finance Minister Shaukat Tarin announced massive tax reductions for cars up to 850cc and electric vehicles. The minister said that the government is encouraging manufacturing of electric vehicles. “That is why we are offering massive tax reductions for them.”

He said that government has ended the tax on import of CKD units for local manufacturing of electric vehicles. “The sales tax on locally assembled electric vehicles will be reduced to 1% from 17%, meanwhile Value Added Tax on import of electric cars and CKD Kits will be 0%  ,” he said.

The minister further said that Federal Excise Duty (FED) on 4-Wheeler Electric vehicles has also been removed. It is pertinent to mention that these benefits were offered in Electric Vehicle policy in October 2020.

Tax Reduction on Cars up to 850cc:

The government has also removed Federal Excise Duty (FED) on locally assembled cars under 850cc. It was 2.5% earlier. While speaking at National Assembly Federal Finance Minister Shaukat Tareen said that sales tax on these cars also has been reduced to 12.5% from 17%, meaning the decrease of 4.5%.

It means the prices of Suzuki Alto, Prince Pearl, and United Bravo will be reduced up to Rs1,13,000.

Before the budget, there were strong rumors that the federal government will reduce the prices of locally assembled cars. There were also reports that the tax relaxations will also be offered on imported cars, however, this is not the case. The tax relaxation for locally assembled cars is surely a great relief, especially for middle class which is the main buyer of small cars.

As a consumer what is your opinion about this relaxation? Do you think it will leave a long lasting impact on local car market? Share your thoughts in comments section.