Pakistan’s Automotive Industry Braces for Impact as Government Imposes 25% GST on Cars with 1400cc Engines and Above

The Government of Pakistan has imposed a new 25% General Sales Tax (GST) on cars with engines larger than 1400cc, as part of its efforts to raise more revenue and meet the conditions of the International Monetary Fund (IMF). This move comes shortly after the government raised the GST from 17% to 18% across the board as per IMF demands.

The new GST on cars with 1400cc or larger engines will result in a wave of price hikes across the automotive industry, which is already struggling due to the declining economic conditions. The new tax will also be applicable to other imported products, such as electronic items, make-up products, pet food, shoes, imported ladies purses, shampoo, soap, lotion, headphones and speakers, iPod, doors and windows, bath fittings, tiles, sanitary ware, chandeliers, and fancy lights.

The automotive industry in Pakistan is already facing challenges due to restrictions on the import of Completely Knocked Down (CKD) kits, and Honda Atlas Cars Pakistan Limited (HACPL) has shut down its production for the entire month of March.

This new tax on luxury items has been introduced to generate additional revenue for the government and meet the conditions of the IMF loan program. However, it is likely to have an adverse impact on the already struggling automotive industry and will result in higher prices for consumers.