There are reports circulating that the government is considering how to impose a withholding tax (WHT) based on the invoice value of automobiles instead of the traditional approach of using engine capacity to decide eligibility.
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How many Prices could be increased?
Let’s take a closer look at the Suzuki Alto VXL AGS, an affordable hatchback made into the limits of our country and carrying a price tag of almost Rs. 3 million (more specifically, Rs. 2,935,000). For those who regularly file their taxes, the withholding tax (WHT) imposed on this car currently stands at Rs. 10,000, and it is Rs. 30,000 for those who want to continue not filing. The WHT would rise to Rs. 29,350 for filers and an incredible Rs. 88,050 for non-filers, however, should the government decide to implement a 1% WHT depending on the invoice price.
As a result, the price of the subcompact hatchback will increase by Rs. 29,350 for filers and by an even larger amount, Rs. 88,050, for non-filers. Sadly, this change would cause the WHT for both sides to increase by an incredible 194%.
It is clear from the most recent sales data that this price increase is bound to have a negative impact on the attraction of this self-identified “most affordable locally manufactured vehicle.” If buyers in mind already have worries about being able to afford the car at its current price, their chances of finding the motivation to buy the car decrease when the price rises to new levels.