ISLAMABAD – The federal government is reviewing a proposal to increase General Sales Tax (GST) on locally manufactured vehicles with engine capacity below 850cc in upcoming budget for fiscal year 2025-26.
It comes as the government is mulling over various measures to generate more revenue in upcoming fiscal year. Reports said the GST is likely to be increased from existing 12.5 percent to 18 percent.
The proposal, if approved, would cause a significant hike car price with engine capacity up to 850cc in Pakistan.
Another proposal is also under consideration to increase levy on all petrol and diesel vehicles in order to promote electric vehicles in the country.
The hike in GST on locally manufactured vehicles of up to 850cc will primarily affect the Suzuki Alto, one of the most selling cars in the country.
Suzuki Alto Latest Prices
The upgraded versions of Suzuki Alto VXR and VXR AGS models available for Rs2,827,000 and Rs2,989,000, respectively. The Alto VXL AGS Upgraded is priced at PKR 3,045,000 as of June 2025.
The federal government is expected to present the budget for next fiscal year 2025-26 on June 10.
Meanwhile, Federal Board of Revenue (FBR) proposed revised tax rate on interest income earned from deposits in commercial banks and savings schemes by 2 percent in the upcoming fiscal year 2025-26 budget.
A report shared by local media said the new proposal targets both tax filers and non-filers and comes as part of efforts to boost government revenue while providing relief to other sectors.
As of FY24-25, interest income from bank deposits is taxed at 15 percent for filers and 35 percent for non-filers. The proposed increase would raise these rates to 17 percent and 37 percent respectively, but final nod from IMF is due.
US based lender – which is technically chalking out reforms – requested detailed tax proposals to compensate for revenue shortfalls caused by concessions to salaried individuals and the shrinking formal economy. The government aims to balance relief efforts with maintaining tax revenue.
