Auto Policy (2021-2026) – Here Are Some New Tax Breaks
  Aug 30, 2023     talha seo  



The federal government has finally announced the Auto Policy, after much anticipation and waiting (2021-2026). The auto industry will benefit from multiple tax breaks under this policy over the next five years. It is worth noting that Pakistan's first Auto Policy will expire on June 30, 2021.


Earlier in the Annual Budget (2021-22), the government reduced Sales Tax from 17 percent to 12.5 percent for locally assembled cars up to 850cc. The offer was later expanded to include 1000cc vehicles.


Federal Minister Khusro Bakhtiar announced the policy, stating that the industry will benefit from the following tax breaks: Federal Excise Duty (FED) is reduced from 2.5 percent to 0% for cars under 1000cc.FED for vehicles with displacements ranging from 1001cc to 2000cc is reduced from 5% to 2.50%. The FED for cars with displacements ranging from 2001cc to 3500cc has been reduced from 7.5 percent to 5%.


There are also concessions involving provincial governments. These are the concessions The, Punjab government will offer a 5% discount on motor tax paid under the Punjab Motor Taxation Act of 1958. The offer, however, is only valid for Electric Vehicles. During the first quarter, the Punjab government will offer a 10% rebate on total annual tax.


Meanwhile, the Khyber Pakhtunkhwa (KP) government announced in its provincial budget that registration fees for cars up to 2500cc will be Rs1. Furthermore, the province will re-register the vehicles at no cost.

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