The last year has been quite challenging for people dealing in the automobile industry as the prices of cars went high. Still, finally, there is good news that the government of Pakistan is making plans in the upcoming budget 2021-2022 to reduce taxes on new imported and locally manufactured cars with up to 800cc capacity.
The Pakistan Automotive Delegation recently had a video conversation with Shaukat Tarin, Federal Minister of Finance and Revenue, to demand a new budget. If these requirements are complied with, the delegation has undertaken lower car prices and deliver vehicles on time. In conclusion to this video conversation, the Ministry of Finance and Revenue told Pakistan Automotive Delegation that the taxes in the next budget are directly proportional to car prices. Therefore, in co-operation with the automobile industry, the Ministry of Finance can reduce extra taxes and reduce car prices. The Minister pointed out that the new policy would focus on further growing and developing the automotive industry to get quality and premium products within their budget.
According to sources, there was a proposal to discontinue a 50% regulatory duty and eliminate an additional 7% customs tariff. The proposal said to reduce the regulatory tax by the same percent and abolish a 2.5% federal excise tax on new imported automobiles. Additionally, a bid has been announced to end the 5% withdrawal tax and lower the standard GST rate from 17% to 12% to import new 800 cc cars. When the proposal is practiced, prices for imported 800 cc cars shall be reduced to Rs300,000 by Rs400,000. It also proposed to make GST rate reduction, abolishing the federal excise duty of 2.5 percent, and other relaxation measures for local cars up to 800cc.
The new auto strategy is considered rotating around cheap and environmentally friendly cars to offer the local market. The current proposal, in general, shows that Pakistan’s automotive industry is doing something great for the middle-class families, who have been suffered a lot from this inflation, and who have postponed their plans to change their cars due to their higher prices.
People are now looking forward to seeing price revision as exchange rates have become more rational, so the first question a middle-class man asks is why prices are not being reduced, even if the market trends can enable this. We hope the government will step in this time. Local manufacturers should either offer significant quality improvements or making price reductions. Prices never quickly change based on speculation on the market. It is also essential to bring Pakistani markets and manufacturers into line.
These speculations will only be confirmed till we have the final budget of 2021-2022 out, and we hope these promises will be fulfilled, so we can see more customers investing in this market and people can have cars in their budgets.