Islamabad: Sales tax collection from motor cars in Pakistan recorded a massive increase during the fiscal year 2024-25, reflecting strong revenue growth driven by new taxation measures. According to the Federal Board of Revenue, total collection from the automobile sector reached Rs34 billion, marking a sharp rise of 158.8% compared to the previous fiscal year.
Officials attributed this surge primarily to the implementation of new tax rules introduced through SRO 370(I)/2024, which amended earlier regulations. Under the revised policy, a 25% sales tax was imposed on locally manufactured or assembled vehicles with engine capacity of 1400cc or above, as well as vehicles with an ex tax invoice price exceeding Rs4 million. The measure also covered double cabin pick up vehicles, expanding the tax net.
The policy shift significantly increased the tax burden on higher end vehicles, leading to a notable rise in government revenue from car sales. Industry analysts believe that while the move boosted tax collection, it may also impact consumer demand for larger vehicles in the long term.
The strong growth in sales tax collection highlights the government’s efforts to enhance revenue through targeted fiscal policies. It also reflects the formalization of the automobile sector and improved compliance among manufacturers and dealers.
Experts suggest that continued monitoring of market trends will be essential to balance revenue generation with sustainable growth in the automotive industry.