ISLAMABAD: The government is likely to introduce a mini-budget to implement tax measures and levies under the new automotive policy, ARY News reported.
According to sources, electric vehicles (EVs) are expected to receive a sales tax relief worth Rs 85 billion under the proposed policy.
The International Monetary Fund (IMF) has reportedly demanded raising the sales tax on EVs from 1% to 18%. However, official government documents suggest maintaining the 1% sales tax on EVs valued up to $75,000, which accounts for the Rs 85 billion tax relief.
Sources added that the Rs 85 billion tax shortfall will be recovered through an alternative plan. To generate replacement revenue, a finance bill may be introduced to impose a Federal Excise Duty (FED) and an Automotive Development Levy.
Under the new auto policy, a 2% levy will be imposed on vehicles with engine capacities between 1001 cc and 2000 cc, while a 10% levy will apply to vehicles of 2001 cc and above.
Official documents confirm that the Automotive Development Levy will apply to all locally assembled and imported petrol and Internal Combustion Engine (ICE) vehicles. Furthermore, a 10% Federal Excise Duty may be imposed on EVs priced over Rs 20 million, alongside a new carbon levy on petrol and ICE vehicles.
The government expects to collect Rs 25 billion from the carbon levy on petrol, diesel, and ICE vehicles, and Rs 37 billion from general levies on these vehicles. Additionally, an estimated Rs 45 billion will be generated by imposing levies on commercial buses and trucks under the new policy.