Govt mulls tax relief to make cars up to 1,000cc affordable

Published June 19, 2021
The meeting also discussed various concessions that could be offered for electric vehicles (EV) to increase the number of such car imports. — AFP/File
The meeting also discussed various concessions that could be offered for electric vehicles (EV) to increase the number of such car imports. — AFP/File

ISLAMABAD: Tax relief for the auto sector is expected to be enhanced for cars up to 1,000cc in the Finance Bill 2021, with the aim of promoting affordable cars and localisation in the country.

In a meeting chaired by Federal Minister for Finance and Revenue Shaukat Tarin on Friday, Federal Minister for Industries and Production Makhdum Khusro Bakhtyar gave a detailed briefing on the new auto policy. The auto policy review and finalisation meeting was attended by Com­merce Adviser Abdul Razak Dawood and SAPM on Finance and Revenue Dr Waqar Masood.

The Finance Bill presented in the National Assembly proposed tax measures for vehicles up to 850cc under the Customs Revenue Measures and suggested exemption of Additional Customs Duty (ACD) and Regulatory Duties (RD). It further proposed reduction of Customs Duty (CD) from 30 per cent to 15pc. For Complete Built-Up Unit (CBU), it was proposed to reduce CD from 25pc to 10pc while for local manufacturing from 12.5pc to 5pc.

During the briefing, Mr Bakhtyar highlighted that the new auto policy will help provide affordable small cars from 850cc to 1,000cc.

Meanwhile, an official of the Ministry of Industries and Production (MoIP) said that there were limited cars below the range of 850cc and enhancing the engine capacity up to 1,000cc would be beneficial for the customers as well as the industry.

“Currently only a limited number of vehicles are below the 850cc category and if the range is enhanced to 1,000cc many auto companies already present in Pakistan would be able to launch small car models in the country,” the official said.

Mr Bakhtyar informed the meeting that the upcoming auto policy would help promote localisation in domestically-assembled cars, produce exportable surplus of two and three-wheelers auto parts and increase competition.

The meeting also discussed various concessions that could be offered for electric vehicles (EV) to increase the number of such car imports.

“Higher number of EVs in the local markets would encourage auto companies to invest in related infrastructure in Pakistan to facilitate EVs,” Mr Bakhtyar said.

The meeting also discussed the non- payment of ACDs by the auto-sector. Federal Board of Revenue (FBR) officials suggested the way forward to the finance minister regarding recovery of pending amount. It was decided that the matter needed to be resolved amicably for final settlement between the FBR and the auto industry.

Published in Dawn, June 19th, 2021

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Tax unrest
Updated 14 Jul, 2025

Tax unrest

Govt has a very poor track record of staying the course of tough decisions that affect the ruling party’s core political base.
Surging numbers
14 Jul, 2025

Surging numbers

PAKISTAN is running out of time — and space. Our population, now over 240m, continues to grow at nearly 2pc a ...
Media matters
14 Jul, 2025

Media matters

PAKISTAN’s journalists are no strangers to living dangerously. The Freedom Network’s new report, Journalism in...
Hybrid worries
Updated 13 Jul, 2025

Hybrid worries

Once elected office is reduced to theatre, useful only for maintaining appearances, it becomes a stage for managing perceptions rather than exercising power.
Bitter taste
13 Jul, 2025

Bitter taste

THE government’s plan to import 350,000 tonnes of sugar, months after allowing the export of more than twice that...
No red lines
13 Jul, 2025

No red lines

THE US’ move to sanction Francesca Albanese, the UN’s Special Rapporteur on human rights in the occupied...