FBR dismisses proposal for 18% sales tax on cars

ISLAMABAD: The Federal Board of Revenue (FBR) has turned down a proposal of the Ministry of Industries that sought to impose 18% general sales tax (GST) on locally manufactured cars across the board, saying it will result in a fall in tax collection as well as revenue loss. The Industries and Production Division was requested to provide its input on the rationalisation of criterion for the imposition of 25% sales tax on locally manufactured and assembled vehicles while avoiding the undermining of tax base by ensuring that no car variant and model became liable to a lower tax rate than what was currently applicable. In response, the Industries and Production Division, in a recent meeting of the Economic Coordination Committee (ECC), proposed that 18% sales tax should be applicable to all local auto manufacturers and assemblers without any discrimination. It, however, recommended that sales tax should not be increased on cars below 1,400cc engine capacity.