ISLAMABAD: The Finance Act 2021 is expected to improve the tax breaks for the auto sector for cars up to 1,000 cc, with the aim of promoting affordable cars and localization in the country.
Federal Minister for Industry and Production Makhdum Khusro Bakhtyar gave detailed information on the new car policy in a meeting chaired by the Federal Minister for Finance and Revenue, Shaukat Tarin. The meeting to review and finalize the car guidelines was attended by trade advisor Abdul Razak Dawood and SAPM for finance and income Dr. Waqar Masood attended.
The Finance Act presented to the National Assembly proposed tax measures for vehicles up to 850 cc as part of the customs revenue and proposed an exemption from Additional Customs Duties (ACD) and Government Duties (RD). She also proposed a reduction in the tariff rate (CD) from 30 percent to 15 percent. For Complete Built-Up Unit (CBU) it was proposed to reduce the CD from 25 to 10 pieces, while for local production it should be reduced from 12.5 to 5 pieces.
During the briefing, Mr. Bakhtyar emphasized that the new car directive will help provide affordable small cars from 850cc to 1,000cc.
Meanwhile, a Ministry of Industry and Production (MoIP) official said there were few cars below the 850cc range and increasing the displacement to 1,000cc would be beneficial for both customers and industry.
“There are currently only a limited number of vehicles below the 850cc category and if the range is increased to 1,000cc, many car companies already present in Pakistan could bring small car models to market in the country,” the official said.
Mr Bakhtyar told the meeting that the upcoming auto policy will help promote the localization of domestically manufactured cars, produce an exportable surplus of two- and three-wheel auto parts, and increase competition.
The meeting also discussed various concessions that could be offered for electric vehicles (EV) to increase the number of such car imports.
“A higher number of electric vehicles in local markets would encourage car companies to invest in the appropriate infrastructure in Pakistan to make electric vehicles possible,” Bakhtyar said.
The meeting also discussed non-payment of ACDs by the automotive sector. Federal Board of Revenue (FBR) officials proposed to the Treasury Secretary how to proceed with the recovery of the outstanding amount. It was decided that the matter must be resolved amicably for a final settlement between the FBR and the auto industry.
Posted in Dawn, June 19, 2021