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Govt Increases Car Prices in Budget 2025 With Higher Tax

The government has proposed an increase in withholding tax charged on the purchase of new cars, according to the official budget announcement.

Not only is the withholding tax increasing across the board, but cars with engine capacity of under 850 cc up to 2000 cc will be charged withholding tax based on a percentage of their price.

Here are the current tax rates and the new tax rates proposed by the government.

For example, if you bought a Suzuki Alto for Rs. 2.5 million, you will pay Rs. 10,000 as withholding tax currently. However, under the new tax rate, you will pay Rs. 25,000 instead. This will increase car prices across the board, with even the least expensive cars affected.

The auto industry is already struggling with low sales due to crippling inflation affecting the purchasing power of the masses. They’ve introduced numerous offers and deals to entice buyers. But, with the government increasing taxes further, this will kick the already gravely injured auto industry and worsen the overall economic situation in the country.

Electric cars haven’t been spared either as the government has proposed withdrawing their tax exemptions. This will affect EVs priced above $50,000, which includes the likes of Audi e-Tron and e-Tron GT.

At the end of the day, these are simply budget proposals and they haven’t been approved yet so take all this with a grain of salt.

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  • Stop posting poop “proposal” articles, wait for the budget. These articles have 0 value for anyone.


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