The cost of locally manufactured or assembled motorcars with engine capacities up to 850cc is expected to rise starting July 1, 2025, as the government moves to adjust tax rates.

Authorities have agreed to increase the sales tax from the current 12.5% to a range of 15-18% in the forthcoming budget.

Presently, locally produced motorcars with engine capacities up to 850cc benefit from a lower sales tax rate of 12.5%. However, under the proposed Finance Bill 2025-26, the Federal Board of Revenue (FBR) is set to eliminate entry number 72 from the Eighth Schedule of the Sales Tax Act 1990, effectively ending the concessionary tax regime for these vehicles.