The federal government imposed a capital value tax (CVT) on cars with an engine capacity of 1300 cc or more. According to the details, the Federal Government will no longer charge Capital Value Tax (CVT) on cars above Rs. 5 million and instead charge this tax on vehicles based on their engine capacity.
In the Finance Bill 2022-23, the Federal Government had announced a 2% CVT on vehicles above Rs. 5 million, but the Federal Board of Revenue (FBR) ended up reducing this figure to 1%. However, the FBR seems to have further changed the conditions of the new tax, which will now be implemented on cars over 1300cc.
According to the details, capital value tax will now be imposed on cars with engines over 1300cc and electric vehicles (EVs) with a battery over 50KWH. This means that several popular vehicles will now fall under this new tax, including:
- Toyota Yaris
- Toyota Corolla
- Changan Alsvine
- Honda City Aspire
- Kia Sportage
- Hyundai Tucson
- Kia Stonic
- and more.
The only company that does not appear to be affected by Capital Value Tax (CVT) is Pak Suzuki Motor Company (PSMC), which does not offer any cars over 1300cc. In addition to the new tax, automakers are already expected to increase the prices of their vehicles due to fluctuating USD/PKR rates.
What do you think of the imposition of Capital Value Tax (CVT) on cars over 1300cc? Let us know in the comments below.
Read more: Pak Suzuki announces an advance tax increase on its cars.