The federal government has decided to keep the sales tax unchanged for locally made or assembled cars with engine sizes up to 850cc, according to the official source.
Officials have set aside earlier proposals to raise the sales tax on these small vehicles from 10–12.5 percent to 15–18 percent in the upcoming federal budget.
Sources suggest that the Federal Board of Revenue (FBR) is likely to retain entry number 72 of the Eighth Schedule of the Sales Tax Act 1990, meaning the current tax relief for these cars will continue.
On another front, the International Monetary Fund (IMF) has recommended that Pakistan impose a carbon levy on petrol, diesel, and combustion engine vehicles over 850cc in the next budget. This proposal is expected to be finalized early next week.
The IMF believes such a levy could raise at least Rs. 25 billion annually by targeting fuel and vehicles that run on it.