The government reduces taxes on cars below Suzuki Alto & others 850cc
In the financial year 2021-22, the government will reduce taxes and duties on cars with less than 850 cc engine size that are accumulated in Pakistan.
This will affect the prices of Suzuki Alto, Ravi, Bolan, Prince Pearl, and United States Bravo.
Imports of cars used in categories such as mine, Wagon R, Alto, and N-One are excluded from the tax.
Presenting the budget on Friday, Finance Minister Shaukat Tareen announced the details.
The Federal Excise Duty (FED) of 2.5% has been removed and the sales tax on vehicles below 850cc has been reduced from 17% to 12.5%, also called entry-level cars.
“Cars below 850cc could see a price reduction of around 5% or 6%,” said Mashhood Khan, an auto sector analyst.
“For those who buy cars in this category, it will be a good price advantage.” A 6% change in Alto’s most varied price would amount to approximately Rs100,000.
Saeem Khan, a research analyst at BMA Capital, said the reduction in sales tax and holding tax (WHT) would directly benefit the buyer.
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The sub-Alto variant is priced at Rs1,633,000. The change in sales tax will directly reduce its value by 63,000. Then WHT also has filers for non-filers and Rs7,500 for Rs15,000, which has been removed, ”Khan said.
He added that the value-added tax has also been reduced and the cost for the VAT company has been reduced.
“Companies cannot fully accept the effects of FED and VAT because they would also like to increase their profits for shareholders,” he said.
Ahmed Lakhani, another senior research analyst, said the impact of the tax and duty change would amount to around Rs100,000. But he doubts the car company will pass on the full low-cost amount to buyers.
A Suzuki spokesman said the company was waiting for full details to share details of the change in car prices.
Pak Suzuki’s stock price rose significantly last Friday. After that the price suffered an upper lock which increased by 7.5% from Rs310 to Rs333 within a day.
If a stock price rises or falls significantly, up to 7.5% for Cody stocks (stocks below Rs20) or towards RS1, then their trades are suspended due to market panic.