Sales Tax on 850 CC Cars was proposed to increase up to 15 to 18% but the federal government rejected the proposal. He announced that sales tax on locally manufactured Cars up to 850 CC will remain 10 to 12.5% in the budget for fiscal year 2025-26.
One of the key factors due to which sales tax will remain unchanged is the Sales Tax Act 1990. The Pakistan Federal Board of Revenue did not remove the Act of 1990, which allows the concessionary sales tax on locally manufactured and assembled cars with the capacity of up to 850 CC.
However, the FBR (Federal Board of Revenue) suggested imposing a carbon levy on petroleum products such as petrol and diesel by the IMF (International Monetary Fund). IMR also indicates to imply a carbon levy tax on Cars assembled with engines above 850 CC for the budget of 2025-26.
The experts claim that the carbon levy tax aims to collect at least 25 billion rupees each year from every single product that uses fuels. The final rates of taxes will be finalized on 10 and 11 June 2025.
