Saturday, December 2, 2023

Govt easing the purchase of cars up to 1000cc by giving tax relief

Government increases tax relief for cars up to 1000cc in Finance Bill 2021, intending to promote cheap cars and localization in the country.

At a meeting chaired by the Federal Minister of Finance and Revenue Shaukat Tarin on Friday, the Federal Minister of Industry and Production Makhdum Khusro Bakhtyar gave a detailed briefing on the new automotive policy. The automotive policy review and finalization meeting attended by Trade Consultant Abdul Razak Dawood and SAPM Finance and Revenue, Dr. Waqar Masood.

The Finance Law presented to the National Assembly proposed tax measures for vehicles up to 850cc under the Customs Revenue Measures and suggested the exemption of Additional Customs Duties (ACD) and Regulatory Duties (RD). In addition, he proposed reducing the Customs Tax (CD) from 30 percent to 15 percent. For the completely built unit (CBU), it was proposed to reduce the DC from 25% to 10%, while for local manufacturing from 12.5% ​​to 5%.

Mr.Bakhtyar highlighted that the new automotive policy will help provide affordable small cars from 850cc to 1,000cc.

Bakhtyar informed the meeting that future automotive policy would help promote localization in cars assembled in the domestic market, produce exportable surpluses of two- and three-wheel auto parts, and increase competition.

The meeting also talked about the non-payment of ACDs by the automotive sector. Federal Board of Revenue (FBR) officials suggested to the Minister of Finance the way forward about recovering the outstanding amount. It was decided that the issue needed to be resolved amicably for a final agreement between FBR and the auto industry.

“Currently, only a limited number of vehicles are below the 850cc category, and if the range is increased to 1,000cc, many automakers already present in Pakistan will be able to launch small car models in the country,” the official said.

The meeting also discussed several concessions that could be offered for electric vehicles (EV) to increase the number of such car imports.

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