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Budget 2024-25: Proposed Withholding Tax on Local Cars

Jawad  12 Jun 2024   196
Budget 2024-25: Proposed Withholding Tax on Local Cars

Budget 2024-25: Proposed Withholding Tax on Local Cars

The latest budget for 2024-25 introduces sweeping changes to tax policies impacting the automotive industry. A key highlight is the proposal to significantly raise the Withholding Tax applied to new vehicle purchases.

Revised Calculation for Registration Charges
Traditionally, registration charges for vehicles were determined based on engine capacities. However, the latest budget brings about a fundamental change: registration charges will now be calculated based on the invoice price of the vehicle. This alteration primarily impacts cars with engine capacities up to 2,000cc.

Example of Revised Registration Charges
Previously, purchasing a Suzuki WagonR for 3.8 million PKR incurred registration charges amounting to 20,000 PKR. Under the new structure, the same purchase would now result in registration charges totaling 38,000 PKR.

Standardized Duty Rate for HEV Imports
Another significant change introduced in the budget is the removal of concessions previously applicable to Hybrid Electric Vehicles (HEVs). Previously, HEVs enjoyed a reduced customs duty rate, often as low as 25% of the vehicle's value. The budget now mandates a standardized duty rate applicable to all vehicle imports, eliminating the preferential treatment previously extended to HEVs.

These amendments reflect the government's strategy to streamline tax policies and ensure uniformity in duties across vehicle categories. As these changes take effect, stakeholders in the automotive industry will need to adjust their strategies and financial planning accordingly.

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