FBR Plans Rs7 Billion Revenue Boost by Raising Sales Tax on Small Vehicles

• FBR plans to increase sales tax on small vehicles to generate Rs7 billion in revenue
• Current sales tax on vehicles up to 850cc is 12.5%
• Proposed change is to apply a standard sales tax rate of 18%
• Aim is to align small car taxation with other goods and reduce tax structure distortions
• Original lower tax rate intended to make small vehicles more affordable for middle-income consumers
• FBR claims the benefit of the reduced rate was not fully realized due to high retail prices
• The change is expected to contribute Rs7 billion to the national exchequer
• Part of broader reforms in the Finance Bill 2025 to widen the tax base and improve tax policy consistency

Source: pkrevenue.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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