Overview
Used cars importers receive full support from the government because the government has abolished Regulatory Duty (RD) on used car imports up to 1800cc. Under the SRO1571(I).2022 authorities imposed 100% RD on used car import. It’s pertinent to mention that the government decided to impose the 100% RD till February 2023, but they push the deadline to March 31, 2023. Now the Tariff Policy Board Chairman has refused to extend the duration.
Used car prices will notably cut down and the automotive industry will surely improve. The implementation of 100% RD almost destroyed the automotive industry. Car prices extremely high in Pakistan in recent months. The step to relief in RD will boost car sales and regularly used car businesses.
How 100% RD Effected on Car Businesses
The 100% RD was imposed to collect amounts with heavy taxation and the government has made $400 million from it. But it made some serious effects on car businesses.
Used car importers almost shut down their businesses during this time. Although the government has made benefit of it it’s disturbed the overall business line across the country.
The relief in taxation will come down car prices significantly in the coming days. The government has not only to provide relief for a used cars but the new cars also consider in the relief. New cars will get 15% RD along with additional taxes.
Regulatory Duty Abolished Benefits
Around 500 to 700 cars were stuck at the Karachi port till the government was rise the RD. These are different engine capacity cars. It was not possible for consumers to pay these high RD’s. the previous statement disturbs the overall used car business in Pakistan. But now they can clear the vehicles as per the new notification. New and used cars are considered under this benefit to provide full support to the car businesses. Dealers can now clear their stock from the custom department and deliver the cars to end users.
What’s New for Locally Assembled Cars
In the recent announcement for Regulatory Duty, there is nothing mention of locally assembled cars. as the taxes will remain for them and no chance automakers come down the prices. The government has only considered imported items for this relief.
However, the government has also announced relief for luxury items, including mobile phone taxes and other range of goods consider previously in the high taxes category.
Conclusion
The announcement has also for LCs approval and CKD kits import but the State Bank of Pakistan (SBP) still not provide approval to automakers for LC’s request. Although, this statement boosts the sale of CBU units. CBU imported companies can manage sale volume with CBU units sale. A number of automakers offer CBU cars in Pakistan Toyota and Honda are popular names. But the locally manufactured vehicle seems no appreciation as taxes remain for them.
