The Ministry of Industry, prices for electric and hybrid cars would rise by 15% starting in July as a result of higher taxes on these cars, which will go from 8.5% to 25%.
Price increases for cars
Senator Vawda also brought up the subject of significant increases in taxes and tariffs on both domestically and imported automobiles. In addition to raising the sales tax rate from 8.5% to 12.75% on hybrid and electric vehicles, the government also quadrupled the custom duty to 50% on imports of electric vehicles priced over $50,000.
According to Indus Motors CEO Ali Asghar Jamali, the FBR has selectively applied the 2021–2026 policy, penalizing only those businesses that have started producing hybrid vehicles with a 25% sales tax.
According to Jamali, the rise in sales tax rates is against the Auto Industry Development and Export Policy as well as the promises made by Pakistan’s four prime ministers to Japanese investors and the country’s ambassador.
He continued by saying that the sales of hybrid cars will drop from the present 7,000 per year to zero under the new tax structure.According to Asim Ahmad, General Manager of the Engineering Development Board (EDB), the FBR reversed the vehicle policy’s incentives without first consulting the Ministry of Industry.
The General Manager informed the standing committee that costs for different hybrid vehicles, which are made locally by the corresponding firms, are projected to rise if the tax rates are raised. These vehicles range in price from Rs1.4 million to Rs2.3 million. This means that prices will rise by 15.2%.
The EDB spokesman added that, once the 25% tax is applied, the price of the Corolla Cross HEV X will increase to Rs11.4 million, the Santa FE Signature to Rs16.9 million, and the Haval H6 HEV to Rs13.7 million.
Vawda stated, “I have spoken with the relevant ministers, and they are unaware of any changes to the tax rates for the automotive industry.”The sales tax on hybrid electric vehicles was raised from 8.5% to 25% in violation of the 2021–2026 policy, without consulting the government or stakeholders in the private sector. This resulted in an outrageous price increase that is anticipated to have a negative impact on sales starting on July 1, 2024, and an extremely low return on investment, according to the EDB.
The EDB representative reported to the committee that Sazgar Engineering Works had invested $15 million, Hyundai Nishat had contributed $10 million, and Indus Motor Company had invested $100 million in hybrid technology.
