Overview
The Auto Policy of 2016-2021 has ended on 30 July 2021. The new Auto Policy (2021-2026) has been announced with the great reduction in Federal Excise Duty. The government provides good relief in taxes to automakers for the next five years. The reduction in taxes is a good hope that automakers will reduce the prices of vehicles. The government reduced taxes for the locally assembled vehicle. The government has made no changes in imported cars taxes is still the same as previous orders. However, the reduction in taxes will also encourage the sale of locally manufactured vehicles and appreciate the new entrance of the automotive industry.
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Auto Policy 2021-2026
The reduction in FED tax has hinted at by the government when they announced the reduction of sales tax for locally assembled cars up to 850cc in the annual budget (2021-2022), the government has reduced the Sales Tax from 17% to 12.5%, which is extended to up to 1000cc cars. Following are the tax reduction Federal Minister Khusro Bakhtiar announced in the Auto Policy (2021-2026):
- Cars up to 1000cc are free from Federal Excise Duty (FED). Previously it was 2.5% FED applied on these cars.
- Cars up to 1001cc to 2000cc will pay 2.5% FED Tax that was previously 5%.
- FED Tax on Cars between 2001cc to 3500cc is now 5%, that was 7.5%.
- On the import of CKD non-localized kits up to 850cc, customs duty has reduced from 30% to 15%, for the localized CKD customs duty has decreased from 46% to 30%, the reduction in taxes is applied on the new models till 30 June 2024 or from the date of issuance of the manufacturing certificate.
- Additional Customs Duty of 7% on CKD kits of cars up to 850cc has ended for 2 years.
- Additional Customs Duty of 7% and Regulatory Duty of 15% on CBU cars up to 850cc has also ended for the next 2 years.
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Concession for Provincial Government
Under the Auto Policy (202-2026) provincial governments grants with great concession. See below the concession involving provincial governments:
Punjab Government:
- Under the Punjab Motor Taxation Act 1958, the Punjab government will give grand up to 5% on the motor tax vehicles, and this will only be applied to Electric Vehicles.
- Additionally, the Punjab government will offer a rebate in the amount of a total annual tax of 10% during the first quarter.
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KPK Government:
Khyber Pakhtunkhawa government announced that they will only receive Rs1 registration fees on cars up to 2500cc in their province. Moreover, they announced that the re-registration of cars is free. Province will never charge any amount against re-registration.
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Conclusion
The reduction in taxes is all that we are waiting for. Now just let’s see how much the prices of cars will reduce according to the relief in FED Tax. Wait for the response of automakers on these benefits, that they will reduce prices according to the tax reduction or not.
Stay up to date with Autodeals.pk for further information.
