The Finance Ministry announced that the luxury tax imposed on motor vehicles will not be applicable to small motor vehicles.

Issuing a statement yesterday (29) the ministry said that vans, cabs, double cabs, motorcycles, and three-wheelers will not be subjected to this luxury tax.

Previously, double cabs were levied under the luxury tax, but it will be removed from 1 November.

This luxury tax will be effective from 6 March and the new tax will apply to all luxury vehicles imported with letters of credit opened after 6 March.

According to the revised regulation, the tax will be applicable to cars and jeeps imported at a cost of more than Rs.3.5 million.

There will be a luxury tax for hybrid vehicles when their CIF value is exceeding Rs.4 million rupees (for the exceeding amount). For electric vehicles, the amount is Rs.6 million rupees.

As the technology for automobiles develops, the luxury of a vehicle is determined not by the engine capacity but by the features of a vehicle.

Accordingly, the tax on petrol cars below 1800 cylinder, diesel cars and jeeps below 2300 cylinders, and electric vehicles below 200 kW will be exempted from the tax effective 1 November.

Vehicles imported and cleared before 21 April 2020 after opening Letters of Credit until 31 October 2019, will be exempted from the luxury tax.

It is further highlighted that this luxury tax will not be levied on small vehicles.

Accordingly, prices of Toyota Vitz, Suzuki Every, Toyota Roomy, Suzuki Alto, Suzuki Baleno, Daihatsu Petrol, Honda Grace, Suzuki Wegon R, Toyota Aqua will not be affected by this luxury tax.

Moreover, the basic models of Axio, Premio and Allion will also be free from this luxury tax.