The government is set to increase the prices of locally manufactured or assembled cars with an engine capacity of up to 850cc starting July 1, 2025. This price adjustment follows the decision to raise the sales tax rate from the current 12.5 percent to a range of 15 to 18 percent in the upcoming Finance Bill 2025-26.
Currently, a reduced sales tax rate of 12.5 percent applies to motorcars with cylinder capacity up to 850cc, aimed at supporting the affordability of smaller vehicles. However, under the proposed Finance Bill, the Federal Board of Revenue (FBR) plans to remove entry number 72 from the Eighth Schedule of the Sales Tax Act 1990, effectively ending the concessionary sales tax regime for these locally manufactured or assembled cars.
This change is expected to impact the pricing structure of small engine vehicles, including popular models from manufacturers like Suzuki. The move aligns with the government’s broader fiscal strategy and is likely to influence car buyers and the automobile market ahead of the new budget implementation.
