KARACHI: As part of the Auto Industry Development and Export Policy (AIDEP) 2021-26, the government has granted existing and new entrants a number of tax breaks to encourage the manufacture of affordable vehicles such as bicycles, small vehicles, tractors, etc.
The five-year policy also aims to improve localization, ensure consumer protection, promote new technologies, such as electric and hybrid vehicles, and target export markets.
In addition to the measures announced in the FY22 budget, the federal cabinet decided on new incentives on Tuesday.
Engineering Development Board (EDB) spokesman and policy general manager Asim Ayaz told Dawn on Wednesday that “the tariff and tax incentives for the auto industry are now complete”.
For affordable automobiles, vans, and light commercial vehicles up to 1 cent to 1,000 cc, all taxes such as additional duties, additional sales taxes, withholding taxes, and federal excise taxes have been abolished, while VAT for locally made automobiles has been reduced to 12.5 percent.
AIDEP aims to improve export and localization
The normal tariff for importing parts is 30 percent for non-localized parts and 46 percent for localized parts, but they will be lowered to 15 and 30 percent for new model introductions, he said.
To cut prices on locally made cars over 1,000 cc, he said the federal excise tax (FED) was cut by 2.5 percent from 1,000 cc to over 2,000 cc for each category of cars / SUVs / LCVs.
For new brand or new model agricultural tractors certified by the EDB, the localized parts tariff is three years from the date of the certificate of manufacture or until April 30th.
For motorcycles over 125 cc, motorcycle rickshaws and auto rickshaws over 200 cc, as certified by the EDB, the localized parts tariff is 30 pieces (16 pieces lower) for three years from the date of issue of the manufacturing certificate or until June 30th . , 2026, while non-localized parts would incur 15-piece customs duties.
In the fight against “on-money”, taxes of 50,000 to 200,000 rupees were set on registration for various engine services if the booking was made by “Person A” and the registration was made in the name of “Person B”.
The mandatory payment of Kibor plus 3pc interest by the manufacturer was set for delivery over 60 days after the initial deposit.
Posted in Dawn, December 23, 2021