KARACHI, July 4: Except for a Korean auto-maker, three Japanese car assemblers have increased prices by one per cent from July one following imposition of one per cent special federal excise duty (FED) on imports by the government.

In another development, the government has reduced the withholding tax on local car sales to 2.5 per cent from five per cent, and it will be applicable from Sept 1. The assemblers will charge this amount from prospective customers from Sept 1.

Earlier, only Indus Motors, makers of Toyota Corolla, had increased price of Corolla and Cuore by Rs23,000-Rs80,000 after the levy of five per cent withholding tax.

The government officials and diplomatic missions had been given exemption of five per cent withholding tax. As a result, they had to bear only Rs4,000 to Rs13,000 in terms of one per cent of duty, depending upon the models.

After the cut of withholding tax to 2.5 per cent, customers will have to bear both FED and withholding tax, while the government departments and diplomatic missions will pay the increase in prices in terms of FED only.

The IMC on Wednesday announced new rates for both customers and government-related organisations and diplomatic missions.

From Sept 1, the new price, including the impact of 2.5 per cent withholding tax and one per cent FED for customers, excluding government and diplomatic missions, for Corolla XLI, GLi and 2D models will be Rs915,000, Rs1,050,000 and Rs1,080,000 as compared with their pre-budget price of Rs879,000, Rs969,000 and Rs1,039,000.The 2D SE and 2D Saloon will be available at Rs1,160,000 and Rs1,328,000 as compared with Rs1,119,000 and Rs1,279,000. Altis Automatic and Manual versions will be priced at Rs1,280,000 and Rs1,370,000 as compared with Rs1,319,000 and Rs1,229,000.

Cuore CL and CL CNG will be priced at Rs390,000 and Rs431,000 as compared with Rs375,000 and Rs415,000. Cuore CX and CNG will carry new price tags of Rs456,000, and Rs497,000 as compared with Rs434,000 and Rs474,000.

An Indus Motors official said the company had decided to absorb the impact of one per cent FED on booking orders in hand or booked till June 30, but customers, who will give fresh orders, will have to pay the one per cent levy during July-August.

He recalled that the five per cent withholding tax from July 1, had nosedived fresh booking. For example, after the increase in prices from June 20 till June 30, the company received orders for only 40 units, while the plant actually rolls out 200 units a day.

Tax-payers will have the facility to adjust the 2.5 per cent withholding tax at the end of the year under income tax, while non-tax payers will have to pay the increase.

Honda Atlas Pakistan has passed on the impact of one per cent FED to consumers from July 1. The new rate of Honda Civic IVTec MT, PT, Oriel MT and Oriel PT is Rs1,341,000, Rs1,381,000, Rs1,473,000 and Rs1,513,000 as compared with Rs1,329,000, Rs1,369,000, Rs1,459,000 and Rs1,499,000.

Honda City MT and CVT will be priced at Rs845,000 and Rs900,000 as compared with Rs839,000 and Rs894,000. However, the company did not announce the increased rates, including the 2.5 per cent withholding tax.

General Manager Marketing Pak Suzuki Motor Company Ashfaq Hussain said the company had increased prices from July 1 following imposition of one per cent FED.

The company had also announced the new rate to be effective from Sept 1 in response to imposition of 2.5 per cent withholding tax.

He said the government’s decision to curtail withholding tax to 2.5 from five per cent is still not satisfactory for the industry. “There should be no withholding tax and FED,” he said.

“I think car sales will decline by five to 10 per cent during July to December 2007 which also becomes very slow in terms of sales because of Ramazan and Eid,” he said, adding the car-makers were enjoying a boom period and were expecting car sales to jump up to 500,000 units by 2,010.

“The industry is unlikely to achieve this growth if both FED and withholding taxes exist,” Hussain said.