Govt Imposed Heavy Taxes On CBUs

Asadullah

06 Jan 2022

357

Govt Imposed Heavy Taxes On CBUs

The federal cabinet has accorded the approval of heavy regulatory duty on the CBU units of electric vehicles, cars and hybrid vehicles, which are added with spark/compression ignition engines (conventional engines). The Economic Coordination Committee (ECC) of the cabinet has continued the policy of imposing new taxes on this auto industry, which results that govt imposed heavy taxes on CBUs.

Regulatory Duty on CBUs

The government took step in increasing RD on CBUs like:

• Increasing RD on conventional engine cars over 850cc but not more than 1,800cc, which range from 15% to 50%.

• Increasing RD on all CBU hybrids, with an engine capacity of over 1,500cc but the engine capacity not more than 1,800cc, which has the range from 15% to 50%.

• Imposition of 10% RD on EVs, which have battery packs of over 50kWh. However, commercial trucks and buses are not included in it.

Imported Cars	Old	New
Conventional engine cars 850cc - 1,800cc	15%	50%
CBU Hybrids 1,500cc - 1,800cc	15%	50%
EVs w/ battery packs over 50kWh	-	10%

The government has to face the heavy import bill and the government has to impose the RD in order to control the trade deficit. This data shows that our country is importing 26,000 cars during first 5 and half months of current financial year.

What Do We Think?

The government decided to bring its new auto policy and there was the mini-budget and now ECC has made this decision. The CBUs have increased the import bill and the government increased the taxes and also imposed new taxes on the cars with big engines but these steps create the confusion among the purchasers.

If the cars are in sea or they are parked at the Karachi port, they will take enough time to get cleared. The concerned authorities will delay the process of clearance of the imported cars and they can demand increase in RD on all car so the government should clear, which they want to do.

Mini-Budget and FED

After presenting the mini-budget, the new RD is implemented and the government proposed in increase in Federal Excise Duty (FED) on the locally assembled cars and the CBUs. The government has made the decision for the locally assembled cars, which are given as under:

• Federal Excise Duty (FED) on locally assembled cars up to 1000cc will remain 0%

• FED increase to 5% from previous 2.5% on 1001cc to 2000cc cars.

• FED on cars above 2000cc increase to 10% from previous 5%

The FED on CBU cars is as follows during this fiscal year:

• FED on cars up to 1000cc will remain 0%.

• FED on cars of 1001cc to 1799cc will increase to 10% from previous 5%

• FED on 1800cc to 3000cc cars will increase to 30% from previous 25%

• FED on cars above 3000cc increased to 40% from previous 30%

CBU CARS	EXISTING RATE	PROPOSED RATES
Upto 1000cc	2.50%	NO CHANGE
1001cc To 1799cc	5%	10%
1800cc To 3000cc	25%	30%
3000cc	30%	40%
LOCALLY ASSEMBLED / CKD
Upto 1000cc	0%	NO CHANGE
1001cc to 2000cc	2.50%	5%
Exceeding 2000cc	5%	10%

And, to curb the ‘ON Money’, the government proposed following steps:

• Advance Tax on Vehicle Registration of cars up to 1000cc will increase to Rs.100,000/- from previous Rs.50,000/-.

• Advance Tax increase on 1001cc to 2000cc cars to Rs.200,000/- from Rs.100,000/-.

• Advance Tax on 2100cc and above cars will increase to Rs.400,000/- from Rs.200,000/-.

Engine Capacity	EXISTING RATE	PROPOSED RATE
Upto 1000cc	Rs. 50,000	Rs. 100,000
1001cc To 2000cc	Rs. 100,000	Rs. 200,000
2001cc and Above	Rs. 200,000	Rs. 400,000

Mini Budget Taxes and duties on Vehicles New taxes Proposed taxes Tax increased on cars Taxes on CBU Vehicle Registration FED CKD Heavy Regulatory Duty

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