Finance Bill 2024, which would have placed a 25 percent sales tax on hybrid electric vehicles (HEVs), has been withdrawn by the federal government.The Ministry of Industries and Production vehemently opposed eliminating the 25 percent sales tax rate, therefore the current 8.5 percent tax rate on HEVs will stay in place.
In their request, the Finance Division and the Federal Board of Revenue (FBR) were asked to reinstate the 8.5 percent sales tax. The Engineering Development Board (EDB) and the Ministry of Industries contended that the 25 percent tax went against the promises stated in the Auto Industry Development and Export Policy (AIDEP) 2021-21.Prior to the proposal, the government levied 8.5 percent sales tax on hybrid cars as opposed to the planned 25 percent, which amounted to a tax break of between Rs. 1.5 and 2.2 million each. vehicle.
The entire amount of customs duty exemptions on hybrid components is approximately Rs. 3 million per car, with savings of nearly Rs. 1 million. Hybrid cars are still pricey, with costs ranging from at least Rs. 15 million to Rs. 10 million, even with these cuts.FBR argues that wealthier buyers can afford the levy and wants the sales tax concession for HEVs removed. They argue that the favored class should not get any more subsidies from the government.
