Overview
The challenging automotive sectors receive new challenges in the Fiscal Year Budget 2023-24. The government documents show that the automotive sector has been overlooked in the new budget summary in terms of relief or favor. The budget documents show the new layer of duty on various parts of vehicles. The significant custom duty (CD) rate increased which also raises concerns about the potential impact on car prices in the coming days.
The automaker’s side complaining about non-favorable government conditions and imposition of tax is right. They are facing tough challenges. The constant increase in taxes and duties makes car costs incredibly high.
Customs Duty On Car Parts in Budget 2023-24
As per the documents of budget 2023-24, a 35% customs duty rate has been imposed on the import of car components. The new rates are imposed systematically on all car parts and this is most surprising news for car makers. Regardless of the ramification and value of the parts for the vehicle. It is applied uniformly which doesn’t make sense to define roles and differences.
Carmakers depend on import of vehicles parts. Imported car components use for car safety, performance, comfort, and various functions. these car parts are included in the new tax:
- Protective Strips
- Luggage Compartments
- Interior Panels and Padding
- Water and Air Hoses and Channels
- Suspension and Brake Components
- Wheels and Tires
- Exhaust System
- Electrical Components
- Bumper and Impact Braces
- Spare Tires and Parts thereof
- Bodywork
- Mounts, clamps, dampeners, and other fitment Components
- Engine and Transmission Assembly
These parts play a significant role to complete the vehicle manufacturing process. Meanwhile, all have different price values in the original market. But it seems after 35% customs duty the cheap parts will also become expensive. Pakistan automotive industry already calling for support and relief for a long time. Automakers are expecting relief in import terms but it seems the budget 2023-24 documents have made it more difficult.
Conclusion
The budget summary impacts in different ways. Car prices are already set at high rates in Pakistan. The new increase in customs duty will make car prices higher. The increase in customs duty also made automakers in a difficult situation. Looking for reasonable car prices is not possible with these high terms of taxes.
