Proposed Tax Increase On Cars in Mini Budget

Asadullah

31 Dec 2021

412

Proposed Tax Increase On Cars in Mini Budget

Federal Government presented the mini-budget in the National Assembly and the government has proposed the duties and taxes for the auto sector. The viewers can find information on proposed tax increase on cars in mini budget. The locally assembled cars will have:

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

• Federal Excise Duty is increased from 2.5% to 5% on 1001cc to 2000cc cars.

• Federal Excise Duty is increased from 5% to 10% on cars above 2000cc

Meanwhile, the Federal Excise Duty on CBU cars is as follows:

• Federal Excise Duty will remain 0% on cars up to 1000cc

• Federal Excise Duty will increase 5% to 10% on cars of 1001cc to 1799cc

• Federal Excise Duty will increase from 25% to 30% on 1800cc to 3000cc cars

• Federal Excise Duty will increase from 30% to 40% on cars above 3000cc 30%

The government has proposed the following steps to reduce ‘On Money’.

• Advance Tax will increase to Rs100,000 from Rs50,000 on Vehicle Registration of cars up to 1000cc.

• Advance Tax will increase to Rs200,000 from Rs100,000 on 1001cc to 2000cc cars.

• Advance Tax will increase to Rs400,00 from Rs200,000 on 2100cc and above cars.

The experts and analysts say that the government proposed new taxes on auto sector to control the increasing of the trade deficit. During the fiscal year 2021, the import of the vehicle was on the higher side and after record breaking spending of the foreign exchange on highest-ever new automobiles in 2021 on the strong demand. The government followed the General Sales Tax exemptions on cars, which are:

• Tax on cars above 1,000cc increase up to 17% from current rate of 12.5%

• Tax on import of Electric Vehicles (EV) in CBU conditions will be increased from 5% to 17%.

New Vehicle Import Data

The data of the financial year 2021 shows that the government imported 10,513 units of new cars, vans, pickups, jeeps, two wheelers and buses. When you compare it with the financial year 2020, you will find that our country has imported 1,680 units in 2020 and 3,716 units in 2021 and 7,424 units in financial year 2018.

For the first time in the history of our country, total 390 new electric vehicles and 19 used EVs were imported in financial year 2021. The country also imported new cars and jeeps and there were total 10,157 units imported, which are compared to 893 units in financial year 2020 and 2,427 units in financial year 2019 and 3,758 units in the financial year 2018.

New Vehicle Import Bill

The automobile import bill is amounting to $2 billion and it is comprised of the completely and semi-knocked down kits for bikes, cars and heavy vehicles, which is $1.6 billion against 727 million in financial year 2020. During this period, total $836 million were spent for the import of the used and new cars during financial year 2021, when you compare to $219 million during the previous year.

Import Bill of CKD/SKD Vs CBU

During the first two months of the current financial year 2022, the import of CKD/SKD kits for the locally assembled cars was increased by 214% to $369 million from $117 million in the same period of the previous year.

Mini Budget Taxes and duties on cars New taxes Proposed taxes Tax increased on cars New Cars Auto Sector Vehicle import bill

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