Overview
Regulatory Duty (RD) seems to be abolished in just a few weeks. Earlier Asim Ahmed, Chairman of the Federal Board of Revenue stated on Thursday, May 4, 2023, that Regulatory Duty will be re-imposed on used cars up to 1800cc.
It’s pertinent to mention here, the government has imposed 100% RD on the import of cars and it was decided till February 2023, but the government has pushed it to March 31, 2023. The Federal Board of Revenue has not extended the SRO after March 31, 2023 and abolished Regulatory Duty. After the end of the deadline, the used car started booking used cars to establish a business with a new beginning.
The government had imposed a 100% RD to control the import of cars in Pakistan which give fruitful benefits to the government and they saved huge amounts.
FBR Re-Imposed RD
As per the report of FBR Chairman Asim Ahmed, there is no need to publish notifications for re-imposed RD. Because the RD was abolished but the import of cars is now prohibited.
The government has made this huge duty to control imports. Because as per International Requirements, they cannot impose a ban on imported products completely. So, they had made it difficult to enter imported products including cars and other luxury items difficult.
Meanwhile, Asim Ahmed stated that the imposing tax decision was made by the Ministry of Trade and FBR would issue notice after the approval of the ministry.
Pakistan Automotive Industry Situation
The restriction on imported cars and products have disturbed the overall automotive industry. Used car dealers almost shut their business due to huge RD on cars. The already available imported car become very expensive to buy. Meanwhile, the local manufacturing vehicles are also not going well. Car makers suffer huge losses. Honda Atlas shut down its plant on March 9, 2023, and then the company continuously extended it. Earlier, Honda extended plant shut down till May 9, 2023.
On the other side, the overall sales of vehicles badly decline and companies blame the non-approval of LCs. Because of raw material shortages, automakers cannot complete customers’ orders.
Conclusion
The dwindling economic situation has made it difficult for automakers to survive on good terms. The shortage of raw material cause delay in deliveries. Also, the rising in taxes takes up car prices to the sky. Long story short the incumbent government has made it difficulties for local manufacturers to getting approve LCs and import vehicle parts.
