Capital value tax reduced on automobiles in amended Finance Bill

The Federal Board of Revenue (FBR) has reduced the capital value tax (CVT) from 2% to 1% on automobiles in an amendment to the Finance Bill 2022. 

The CVT originally stood at 2% for all cars valued in excess of Rs5 million. It was introduced as part of the new wealth tax package in the Finance Bill 2022. It in particular was levied alongside other duties on the automobile industry to ameliorate the current account deficit and assist the government with revenue generation. 

This change in the CVT may be an olive branch to the automobile industry after their inclusion in the list of industries subject to the 10% Super Tax and the State Bank being given additional powers to curtail imports.