Making Automobiles Affordable for the Middle Class (P & R Vol.2 Issue 7)

In March, 2019, the government introduced the Finance Supplementary Second Amendment Act, 2019. Among other things, through the act government introduced a 10% Federal Excise Duty (FED) on cars with engine capacity of 1,700cc and above. Later on, in the annual budget for fiscal year 2019-2020, the government decided to further expand the FED regime in the automobile sector. As a result, multiple tax slabs were introduced as listed in Table 1.