ISLAMABAD – Pakistan’s new auto policy could bring an additional financial burden for buyers of high-engine-capacity vehicles, with the government proposing a 10% Automotive Development Levy on cars above 2,000cc and a 2% charge on vehicles over 1,000cc.
The draft policy, approved by Prime Minister Shehbaz Sharif, proposes introducing the levy on imported as well as locally assembled or manufactured vehicles, according to sources cited by ProPakistani.
Under proposed framework, the levy rate would vary according to engine capacity and vehicle category, with larger passenger cars facing the highest proposed charge. However, smaller cars and several other vehicle categories would remain exempt. Cars with engine capacities below 1,000cc would attract no levy, while two-wheelers, three-wheelers and agricultural tractors would also fall under the zero-rate category.
The draft sets 2% levy on passenger vehicles classified under PCT 87.03 with engine capacities between 1,001cc and 2,000cc. For cars exceeding 2,000cc, the proposed rate rises to 10%. The policy would also extend the proposed 2% charge to several commercial vehicle categories, including prime movers, except those used for agricultural purposes, trucks, light commercial vehicles (LCVs), buses and vans.
Could Car Prices Rise Under the New Policy?
The proposed levy could affect the cost of vehicles covered by the new framework, although its actual impact on buyers will depend on how the charge is calculated and implemented.
The draft does not mention final calculation method or effective date. These details will be crucial in determining how the levy translates into costs for imported vehicles and cars assembled or manufactured in Pakistan.
For now, the proposed rates remain part of the draft auto policy. The final implementation framework will determine when the levy takes effect and how it applies to the specified vehicle categories.
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