Govt Imposes Massive Taxes on Imported Cars

The Economic Coordination Committee (ECC) has approved massive taxes on imported cars (CBUs), including electric vehicles (EVs) and hybrid vehicles, alongside cars with conventional engines. The decision to increase the Regulatory Duty (RD) comes just days after the government proposed a massive hike in the Federal Excise Duty (FED) on both locally assembled cars as well as imported CBUs.

According to the government, the increased taxes on imported cars (CBUs) have been imposed as a means to control the import bill, which has been on the rise partially because of imported cars. The country reportedly imported more than 26,000 cars during the first half of the current fiscal year.

It is pertinent to mention that increase in the taxes will end up reversing the relief given by Prime Minister Imran Khan to the automotive sector in June 2021, making vehicles go out of reach of the average consumer. The car prices in the country have already seen a massive increase because of the hike in USD to PKR rates as well as shipping and raw material costs as a result of the COVID-19 pandemic.

New Taxes on Imported Cars (CBUs)

• Regulatory Duty (RD) on imported cars below 850cc will remain unchanged.
• Regulatory Duty (RD) on imported cars 850cc to 1800cc has been increased from 15% to 50%.
• Regulatory Duty (RD) on Completely Built Units (CBUs) 1500cc to 1800cc has been increased from 15% to 50%.
• 10% Regulatory Duty (RD) will be imposed on EVs with battery packs of over 50kWh. However, this will not be implemented to commercial trucks or buses.

Proposed Taxes on Cars in Mini-Budget

The Government has also proposed increased taxes on locally assembled cars in the mini-budget. According to the details, the Government has proposed a in the Federal Excise Duty (FED) by up to 10% depending on the engine capacity.

Locally Assembled Cars

The Government has proposed an increase in the Federal Excise Duty (FED) from 2.5% to 5% for locally assembled cars with 1001cc to 2000cc engines, while they have proposed an increase in FED from 5% to 10% on cars with engines of 2000cc and above. However, the FED on cars up to 1000cc will remain unchanged at 0%.

CBUs

Furthermore, the Government has proposed an increase in taxes for imported cars (CBUs) as well. According to the details, the Government has proposed an increase in FED from 5% to 10% on imported cars with 1001cc to 1799cc engine capacity, while suggesting an increase in FED from 25% to 30% on imported cars with 1800cc to 3000cc engine capacity. Moreover, an increase in FED from 30% to 40% has also been suggested for cars above 3000cc. However, there will be no change in FED for cars up to 1000cc.

What you think of this decision to increase taxes on imported as well as locally assembled cars? Let us know in the comments below.

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