In Finance Bill 2022-23, the government announced 2% CVT on cars above PKR 5 million which was reduced to 1% in the final Finance Act 2022, by the FBR (Federal Board of Revenue).
According to Finance Act 2022, the reduced CVT has been applied, but with conditions. The FBR will impose CVT on vehicles under the following criteria:
- Electric vehicles with battery power above 50 kWh
- Engine size above 1300cc
This implies that the engine size matters and not the price range of the car being above PKR 5 million.
The reduction in the CVT to 1% from 2%, includes more cars/consumers in this new tax net and now the buyers of cars above 1300cc have to pay extra tax.
Cars that Will Experience a Price Hike
The new CVT tax will impact cars including:
- Changan Alsvin
- Kia Stonic
- Toyota Yaris
- Honda City
- Honda Civic
- Kia Sportage
- Toyota Corolla
- Hyundai Tucson, etc.
On top of the CVT taxes, rupee devaluation will cause prices to rise even further, adding to the trouble of consumers.
Suzuki in the Sweet Spot
While car prices will increase due to the imposed taxes, Suzuki will remain in the sweet spot. Suzuki doesn’t offer any cars above 1300cc meaning, buyers of Suzuki cars will remain unaffected by the CVT tax.