ISLAMABAD: Customs duty on the import of new cars will not be reduced this year as the Cabinet has deferred the proposal, officials of the Federal Board of Revenue informed the Senate’s Standing Committee on Finance on Saturday.

The proposal, included in the Finance Bill 2017-18, was to cut the duty by 10 percentage points to 40 per cent on new imported cars with engine capacity of 800 to 1,800 cubic centimetres (cc).

The senators criticised the Cabinet’s decision. Saleem Mandviwalla, chairman of the committee, said local carmakers have not been meeting their commitments and used their influence to gain this protection.

He said duties on hybrid cars should also be reduced to put pressure on local automakers so that they start investing to manufacture such vehicles.

Senator Mohsin Leghari criticised the government for restricting the import of old cars. “We want to support the auto sector of the country, but buyers’ rights have to be honoured, too,” he said.

It was decided that officials of the Ministry of Industries would also be invited in the meeting to discuss the matter.

The FBR officials told the committee that the government was set to impose a regulatory duty of Rs650 apiece on mobile sets imported from China. Pakistan imports around 25 million sets from China each year.

The other key tariff reduction proposed in the budget was a reduction in the duties on the import of raw material for diapers, and spare parts of submerged motors and pumps.

Meanwhile, Senator Osman Saifullah Khan proposed that withholding tax should be increased on international air travel for people who do not file their income tax returns. “At least this could be imposed on those non-filers who travel in business class,” he said.

The committee members proposed that the National Tax Number can be used to impose a higher withholding tax. Tariq Bajwa, secretary of the Ministry of Finance, said the government will examine the proposal in consultation with the FBR.

Published in Dawn, June 4th, 2017