Government Increases Tax on Vehicles over 2000CC


In a significant development, the federal government has raised the excise duty on the registration of vehicles with an engine capacity over 2000 CC in the finance bill. The move aims to generate additional revenue for the government and implement a more progressive tax structure in the automotive sector.

Under the new regulations, a six percent fixed tax has been imposed on the value of vehicles ranging from 2001 CC to 2500 CC. Previously, filers were required to pay a tax of Rs 0.25 million for vehicles with engine capacities between 2001 CC and 2005 CC.

For vehicles falling within the 2501 CC to 3000 CC range, an eight percent fixed tax has been introduced for registration. Earlier, filers had to pay Rs 0.2 million, while non-filers were subjected to a tax of Rs 0.4 million. Additionally, a ten percent fixed tax has been imposed on the registration of vehicles with an engine capacity of 3000 CC or higher.

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The National Assembly recently passed the Finance Bill 2023-2024, which included the budgetary proposals for the upcoming financial year. The bill, presented by Finance Minister Ishaq Dar, carries a total outlay of Rs 14,480 billion.

The passage of the federal budget with revised targets aims to address the concerns of the International Monetary Fund (IMF) and revive the stalled loan program. The amendments include a revised tax collection target of Rs 9,415 billion, up from the initial target of Rs 9,200 billion.

Moreover, the allocation for pension payments has been increased to Rs 801 billion, up from the previous allocation of Rs 761 billion.

These changes in the excise duty and budgetary allocations reflect the government’s efforts to streamline tax structures, boost revenue generation, and address fiscal challenges in the country. The revisions aim to strike a balance between meeting financial targets and providing necessary resources for key sectors such as pension payments.

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