The Pakistani government has proposed ending existing tax relief on small cars, including popular models like the Suzuki Alto, under the upcoming federal budget. If the plan is approved, all vehicles—regardless of engine size—would face a uniform 18% General Sales Tax (GST), reversing previous concessions for smaller, more affordable cars.
The change, part of amendments to the Eighth Schedule of the Sales Tax Act, is aimed at boosting revenue through a simplified tax structure. However, it would significantly impact car buyers, especially those seeking entry-level options.
Read More: GST Hike May Raise Prices of Small Cars
Industry estimates suggest that the Suzuki Alto’s price may rise by Rs120,000 to Rs180,000, depending on the variant. Current showroom prices for Alto models are:
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Suzuki Alto VXR AGS: Rs2,989,000
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Suzuki Alto VXL AGS: Rs3,045,000
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Suzuki Alto VXL AGS (with more features): Rs3,140,000
If implemented, the tax increase would push these figures higher, adding pressure on already strained household budgets. Car dealers and consumers have expressed concern over the timing of the proposal, as inflation and high interest rates have already slowed auto sales.
Read More: Govt Plans Higher Taxes on Cash, Cars and E-Commerce
In addition, the government has proposed raising GST on hybrid electric vehicles (HEVs) from 8.5% to 18%. This move nearly doubles the tax burden on cleaner, fuel-efficient vehicles—a reversal from earlier incentives aimed at reducing fuel imports and environmental impact.
Analysts say the proposed tax changes may hinder local car demand and limit adoption of eco-friendly technology in the country’s transport sector.