Small Cars Like Suzuki Alto to Get More Expensive

In the proposed federal budget for 2025–26, the government is planning to increase the General Sales Tax (GST) on locally assembled small cars, such as the Suzuki Alto. The GST rate may go up from 12.5% to 18%. If this change is approved, it will make these cars more expensive, especially for budget-conscious buyers.

Details About the Tax Change

The Federal Board of Revenue (FBR) is expected to remove the reduced GST rate for small-engine cars. This will be done by deleting the special tax entry from the Eighth Schedule of the Sales Tax Act. Once this happens, all locally assembled cars with engines up to 850cc will be taxed at the full standard rate of 18%, just like other cars.

This change mainly affects popular small cars like the Suzuki Alto, which is known for being affordable and fuel-efficient. By removing the tax break, the government hopes to treat all car types equally under the tax law and increase revenue.

How Much Will Prices Go Up?

According to early 2025 data from Pak Suzuki, the price of Suzuki Alto may rise quite a bit. The increase in cost could range from Rs. 120,000 for the base model to nearly Rs. 180,000 for the higher-end variant. These estimates are based on ex-factory prices, meaning the cost before other fees like registration and insurance.

This sharp increase may put the Suzuki Alto out of reach for many low- and middle-income buyers who are looking for an affordable vehicle.

What This Means for Car Buyers and the Market

• Higher Costs for Consumers: If the new tax rate is applied, customers will have to pay more when buying a small car. The final price will depend on the variant they choose, but the increase will be noticeable for all models.
• Why Is the Government Doing This? The main reason behind this move is to remove tax advantages that were previously given to small-engine cars. The government wants to simplify the tax system and collect more revenue by applying the same GST rate across all vehicles.
• Impact on the Car Market: With higher prices, locally assembled small cars may become less attractive to buyers. This could lead more people to consider buying imported used cars, which might be more affordable even after taxes. There are also reports that the government might relax import rules to give buyers more options and balance the market.

If the proposed GST hike is passed, owning a small car like the Suzuki Alto could become more costly. The change is part of the government’s plan to increase tax income and create a fairer tax system. However, it may also make it harder for people to afford new cars, especially those from the lower-income group. The market could shift as buyers look for cheaper alternatives, possibly including used or imported vehicles.

READ MORE: Toyota Fortuner GRS Now Available with 50% Down Payment & 0% Interest