Tax relief on luxury cars questioned

The Express Tribune reported that a committee of the Ministry of Industries and Production has proposed cutting sales tax on luxury vehicles after examining the rules governing automotive and auto parts manufacturing. The Auto Parts Export Council, chaired by the industries minister, carried out that review alongside officials from commerce, trade promotion and engineering development bodies, plus three industry representatives.

Abdul Rehman, former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers, criticised it as a benefit for a small group of high-end buyers that would weaken local producers. He argued that the timing is poor because Pakistan remains under an IMF programme that has asked ordinary citizens for painful sacrifices, and he questioned whether limited fiscal room ought to go toward cutting taxes on luxury cars.

Rehman noted that the Finance Bill 2026 raised the tax rate on hybrid and plug-in hybrid cars to 25%, making any reduction a basic policy question. According to the report, a locally made Suzuki Alto costing close to Rs3 million bears roughly Rs550,000 in levies, including sales tax, excise duty and the NEV levy, while a range extended electric vehicle near Rs10 million reportedly pays about Rs100,000 in sales tax and no excise duty or NEV levy. Rehman said such differences raise doubts about whether incentives are shared fairly, adding that the Alto and Cultus, basic transport for middle-income families, receive no meaningful relief.