The federal government of Pakistan has introduced a new car taxation policy in Budget 2024-25, focusing on taxing based solely on engine size. This change aims to simplify the tax system and increase tax revenue.
Tax Rates Based on Engine Size:
The new taxes on cars vary from 0.5% to 12% based on engine size. Suzuki Alto, being an entry-level car, falls into the lower tax brackets under the Pakistan Muslim League (N) government’s introduced categories.
Impact on Suzuki Alto Price:
Here is a breakdown of the price changes for Suzuki Alto:
| Engine Size (cc) | Old Price | Previous Tax | New Proposed Rate | New Tax Rate | New Car Price |
|---|---|---|---|---|---|
| Up to 850 | Rs2,331,000 | Rs10,000 | 0.50% | Rs12,500 | Rs2,342,655 |
Post-Budget Taxation on Cars:
The following table illustrates the tax rates applied to different engine sizes after Budget 2024-25:
| Engine Size (cc) | Tax Rate (%) |
|---|---|
| Up to 850 | 0.5 |
| 851 to 1000 | 1 |
| 1001 to 1300 | 1.5 |
| 1301 to 1600 | 2 |
| 1601 to 1800 | 3 |
| 1801 to 2000 | 5 |
| 2001 to 2500 | 7 |
| 2501 to 3000 | 9 |
| More than 3000 | 12 |
Analysis:
This tax revision not only affects Suzuki Alto’s pricing but also indicates higher taxes for larger engine vehicles, reflecting their actual market value. It is expected that the impact on consumers will be mitigated for tax filers who can adjust taxes in advance.
The changes in taxation policy post-budget have a significant impact on the automotive market, particularly in determining the prices of popular cars like Suzuki Alto. Consumers and industry stakeholders will navigate these adjustments as the new tax rates come into effect, aiming to strike a balance between government revenue and consumer affordability.
