Automotive

Huge tax relief for automobile sector in 2021-22 budget

Budget automobile

Due to a considerable reductions in customs and taxes on the sales and acquisitions of smaller vehicles, the 2021-22 budget has been a source of good news for the automobile sector, analysts, enthusiasts, and casual car consumers alike. 

More crucially, the current budget has made it clear that the government’s principal goal in the near future is to encourage the purchase, sale, and manufacture of more ecologically friendly automobiles. 

In addition to tax reduction for the sale and purchase of vehicles with engine displacements of up to 850cc, Shaukat Tarin, the Federal Minister of Finance, revealed that the government has granted tax reduction on the imports of CKD units of Electric Vehicles (EVs). 

Budget slashes taxes on small, EVs to stimulate automobile industry

He also mentioned that the sales tax on domestically produced electric vehicles has been decreased from 17% to 1%. Furthermore, the Value Added Tax (VAT) on electric vehicles and their conversion kits, as well as the Federal Excise Duty (FED) on four-wheeled electric vehicles, have been removed. 

Finance Minister stated that the government intends to use these measures to stimulate the purchase and sale of environmentally friendly vehicles in Pakistan. 

It’s worth noting that the public in Pakistan is still unsure about the adoption of EVs due to a lack of charging infrastructure, fundamentally high manufacturing costs, which lead to expensive prices, and maintenance-related concerns. 

The success of electric vehicles in Pakistan can only be secured if the government adopts a policy that encourages the rapid development of charging infrastructure and takes steps to reduce EV manufacturing costs to keep prices low. 

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