Mini Budget 2022: New taxes on petrol and electric vehicles
The government has imposed these taxes on the automobile industry to restrain the high import bill and the overall number of imports.
The National Assembly has finally approved the mini-budget. The most notable amendment in the budget is that the Federal Board of Revenue will now charge 12.5% General Sales Tax on the import of Completely Built-Up Electric Vehicles.
However, the GST on locally-manufactured Hybrid Electric Vehicles (HEVs) with up to 1,800cc engine displacement will be charged at a reduced rate of 8.5%, instead of the 12.5% recommended earlier in the Finance (Supplementary)Bill in 2021.
The GST rate on locally-manufactured HEVs with engine displacement between 1,801cc and 2,500cc will be 12.75%. The federal government has also amended the rates of the Federal Excise Duty on locally manufactured and assembled cars, SUVs, and commercial automobiles.
According to the revisions, FED at 2.5% will be charged on locally assembled vehicles with engine capacity up to 1300cc. Furthermore, 5% FED would be charged on vehicles with engine capacity between 1301cc and 2000cc and 10% FED on vehicles of engine capacity of 2001cc and above.
Other than these revisions, the following are the new Regulatory Duties rates approved for CBU cars:
- RD on Internal Combustion Engine vehicles with engine displacements above 850cc has been raised from 15% to 50%.
- RD on Hybrid Electric Vehicles with engine displacements between 1,500cc to 1,800cc increased from 15% to 50%.
- RD on EVs with battery packs larger than 50 kWh has been increased to 27%.
The government has imposed these taxes on the automobile industry to restrain the high import bill and the overall number of imports. However, these tax rates could also result in another wave of price-hikes, which is likely to damage the new vehicles market significantly.
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