Karachi, March 7, 2025 – The collection of sales tax on motor cars has witnessed an extraordinary 193% increase during the first half (July – December) of the current fiscal year 2024-25, according to a report released by the Federal Board of Revenue (FBR).
The FBR reported that it collected Rs 12.85 billion in sales tax on motor cars during this period, a significant surge compared to Rs 4.39 billion collected in the corresponding half of the previous fiscal year. The sharp rise in sales tax collection reflects the substantial growth in the automobile sector and increased demand for motor cars.
The increase in sales tax revenue can be largely attributed to a remarkable 54% growth in motor car sales during the first half of the fiscal year 2024-25. According to data from the Pakistan Auto Manufacturers Association (PAMA), total motor car sales during this period reached 60,676 units, significantly higher than the 39,454 units sold in the same period last year.
In December 2024 alone, motor car sales stood at 9,800 units, reflecting a 3% Month-on-Month (MoM) decline but an impressive 69% Year-on-Year (YoY) increase. Despite the minor MoM decline, the overall YoY growth remains strong, contributing positively to the surge in sales tax collection.
The FBR further reported that sales tax collection on motor cars experienced a staggering 452% increase in December 2024, reaching Rs 2.19 billion, compared to Rs 397 million collected in the same month of the previous fiscal year. This exponential growth in sales tax revenue highlights the ongoing expansion of the automobile market and the effectiveness of tax policies targeting the sector.
Several factors have contributed to the rise in motor car sales, including improved consumer purchasing power, the launch of new vehicle models, and lower interest rates, which have made car financing more accessible. Additionally, policy measures aimed at boosting economic activity have further fueled demand for motor cars, thereby driving up sales tax revenues.
The FBR remains committed to optimizing sales tax collection from the automobile sector while ensuring compliance and facilitating growth in the industry. Moving forward, continued monitoring of motor car sales trends and policy adjustments will be crucial in sustaining revenue growth from this segment.