Cars and Auto Parts Likely to Become Cheaper After Budget

The federal government has proposed reducing duties on vehicles, auto parts, and industrial raw materials in the fiscal year 2025-26 budget in a key meeting with the International Monetary Fund (IMF), official sources informed ProPakistani.

Sources said the government has proposed the removal of the existing 2 percent additional customs duty on auto spare parts. It is also considering a gradual reduction in customs duty slabs currently ranging from 4 percent to 7 percent.

Authorities are eyeing a 20 percent cut in existing customs duties for vehicles, which are presently 15-90 percent.

To push exports by up to $5 billion, tax cuts on raw materials used in various industries, including textiles, chemicals, plastics, auto parts, iron, and steel are also under discussion. A reduction in duties on semi-finished goods and industrial raw materials is being planned to support industrial growth.

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Sources added that the real estate sector is potentially the subject of a 0.5 percent reduction in withholding tax on the purchase and sale of property.

The proposed tax revenue target for the Federal Board of Revenue (FBR) for the next fiscal year is Rs. 14,305 billion. Of this, Rs. 600 billion is projected to come from improved enforcement of existing tax laws, while Rs. 400 billion is expected from new policy measures.

The government is also planning to begin tax collection on agricultural income starting July 1, 2025.

Meanwhile, the IMF continues to urge Pakistan to broaden its tax base and document more of its economy.