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FBR Introduces Numerous Measures to Reduce Car Prices

byMuhamad Arshad
July 3, 2021
in Business, Economy
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The Federal Board of Revenue (FBR) on Friday, issued the details of the incentives and concessions provided to the auto industry through the Finance Act 2021-22.

According to the FBR’s budget instructions issued to the Collectors of Customs here today, in order to bring down prices of small cars and to support lower-middle socio-economic group upgrading from motorcycle to their first family car, the following measures have been taken:

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1- The previous bifurcation of cars “up to 800cc” and “exceeding 800cc” has been replaced with “up to 850cc” and “exceeding 850cc” in respective places in tariff.

2-Customs Duty on import of non-localized Completely Knocked Down (CKD) kits of vehicles up to 850cc has been reduced from 30 percent to 15 percent, whereas that of localized kits has been reduced from 46 percent to 30 percent for new make or new model as certified by the Engineering Development Board (EDB) for two years from the date of issuance of manufacturing certificate or up to 30th June 2024, whichever arrives first.

3-Seven percent additional customs duty (ACD) on CKD kits and seven percent ACD and 15 percent Regulatory Duty (RD) on Completely Built-Up (CBU) cars up to 850cc have been exempted for two years.

4-Customs Duty on electric vehicles (EVs) in CBU form reduced to 10 percent from 25 percent for commercial importers whereas a reduction of five percent from 12.5 percent has been done for the imports by the local manufacturers of EVs under SRO 656(I)/2006 for one year.

5- Customs Duty on import of non-localized CKD kits for rigid trucks above five tons GVW falling under HS Code 8704 reduced from existing 10 percent to five percent.

6- Customs Duty reduced to four percent on specific parts for Hybrid Electric Vehicles (HEVs) and three percent for Plug-in Hybrid Electric Vehicles (PHEVs) by adding new Part-V(B) of Fifth Schedule.

7- Customs Duty on sub-assemblies of vehicles of PCT heading 87.11 (except for motorcycle rickshaw of PCT heading 8711.3020) reduced from existing 20 percent to 12.5 percent. These measures will also remove anomalies the non-localized CKD kits is 15 percent.

8- For 4-stroke auto rickshaw of PCT heading 8703.2115, Customs Duty on localized CKD kits is at 30 percent for new make or new model exceeding 200cc as certified by EDB for two years from the date of issuance of manufacturing certificate or up to 30th June 2024, whichever comes first. Whereas Customs Duty on non-localized CKD kits is 15 percent.

9- For vehicles of PCT heading 87.11 (except motorcycles rickshaw of PCT heading 8711.3020) Customs Duty on localized CKD kits is 30 percent for new make or new model exceeding 125cc as certified by EDB for two years from the date of issuance of manufacturing certificate or up to 30th June 2024, whichever arrives earlier. Whereas Customs Duty on non-localized CKD kits is 15 percent.

10- For motorcycles rickshaw of PCT heading 8711.3020 Customs Duty on localized CKD kits is 30% for new make or new model exceeding 200cc as certified by EDB for two years from the date of issuance of manufacturing certificate or up to the 30th of June 2024, whichever comes earlier. Customs Duty on non-localized CKD kits is 15 percent.

11- All components or sub-assemblies shall not be eligible for the benefit of exemption under SRO 655(I)/2006 where IORC, as determined by EDB or IOCO, is less than 30% value addition for the manufacture of specified components or assemblies.

12- Agricultural Tractors of PCT heading 87.01, Customs Duty on localized CKD kits is 15% for new make or new model as certified by EDB for two years from the date of issuance of manufacturing certificate or up to 30th June 2024, whichever comes first.

13- The concessionary Customs Duty for various models of new entrants under ADP 2016-21 to continue for five years from the date of the first manufacturing certificate of respective variant issued by EDB or up to 30th June 2026, whichever arrives earlier.

14- The importer-cum-assembler or Original Equipment Manufacturer (OEM) shall pay KIBOR plus 3 percent per annum to the customer against late delivery exceeding 60 days of initial booking on the whole of the deposited amount. Statement/details of reimbursement @ KIBOR + 3% against deliveries beyond 60 days shall be submitted to EDB or IOCO bi-annually. Furthermore, the importer-cum-assembler or OEM shall comply with shortlisted WP-29 Regulations as determined by EDB; whereas EDB or IOCO shall ensure the compliance.

15- Appendix-I and Appendix-II of SRO 693(I)2006 will be updated biannually by December 31, and June 30 of every year on the recommendation of EDB. The components or assemblies localized by any OEM or vendor in the respective vehicle category shall qualify for inclusion in Appendix-I and Appendix-II.

Tags: 850cc to 1000cc CarsCKDEDBFBRFederal Board of RevenueReduce Car Prices
Muhamad Arshad

Muhamad Arshad

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