SMEDA member criticises tax relief on luxury vehicles

Mashood Ali Khan, a member of the Small and Medium Enterprise Development Authority (SMEDA), has objected to a planned tax concession on high-value cars costing more than Rs10 million, Business Recorder reported. Speaking on Monday, he called on the government to cut sales tax on vehicles below 1000cc from 18 percent to 9 percent, arguing that smaller cars serve middle-income buyers and would lift output for SME auto parts makers.

Khan cited import costs for CKD and SKD kits, which reached USD 2.118 billion in FY26 and USD 6 billion across the last four years. He described that spending as unsustainable under the current IMF programme and said the policy has long favoured a small group of high-end buyers. Localisation by Chinese and Korean luxury brands has stayed negligible for a decade, giving SME parts makers little gain.

Khan questioned whether scarce fiscal room should go toward easing taxes on luxury cars while ordinary citizens absorb adjustment costs, saying the moment is poorly chosen. He accepted that cleaner transport has merit but wants any relief tied to binding localisation targets and a commitment to keep at least one model made in Pakistan for five years without yearly changes.