KARACHI: The government has showered a number of tax and duty reliefs on the existing and new entrants under the Auto Industry Development and Export Policy (AIDEP) 2021-26 to encourage the manufacturing of affordable vehicles including bikes, small vehicles, tractors, etc.

Besides, the five-year policy is also aimed at improving localisation, ensuring consumers’ protection, promotion of new technologies ie electric and hybrid vehicles and targeting export markets.

The Federal Cabinet on Tuesday approved fresh incentives in addition to measures the government had announced in the budget FY22.

Spokesperson of Engineering Development Board (EDB) and General Manager Policy Asim Ayaz told Dawn on Wednesday that “the duty and tax incentives for the auto industry are now complete.”

For affordable cars, vans and light commercial vehicles up to 1p to 1,000cc, all taxes like additional customs duty, additional sales tax, withholding tax and federal excise duty had been removed while sales tax had been reduced to 12.5pc on locally manufactured cars.

AIDEP aims at improving export and localisation

The normal rate of customs duty on import of parts is 30pc for non-localised parts and 46pc on localised parts but they will go down to 15pc and 30pc for the introduction of new models, he said.

For bringing down prices of locally manufactured cars above 1,000cc, he said, the federal excise duty (FED) was cut by 2.5pc on each category of cars/SUVs/LCVs from 1,000cc to above 2,000cc.

For agriculture tractors of new make or new model as certified by the EDB, the customs duty on localised parts would be 15pc (20pc advantage) for three years from the date of manufacturing certificate or up to June 30, 2026, whichever is earlier.

For motorcycles exceeding 125cc, motorcycle rickshaws and auto-rickshaws exceeding 200cc as certified by the EDB, the customs duty on localised parts would be 30pc (down by 16pc) for three years from the date of issuance of the manufacturing certificate or up to June 30, 2026, whereas non-localised parts would attract 15pc customs duty.

On tackling “on-money,” taxes amounting to Rs50,000 to Rs200,000 for different engine power had been fixed on registration where the booking was made by ‘Person A’ and registration was made in the name of ‘Person B’.

Compulsory payment of Kibor plus 3pc interest by the manufacturers had been fixed on delivery beyond 60 days on initial deposited payment.

Published in Dawn, December 23rd, 2021