In the budget, the auto industry receives considerable relief. In addition to eliminating the value-added tax on imported electric automobiles, the sales tax on locally built electric vehicles was reduced from 17% to 1%. Electric vehicles will also be exempt from federal excise taxes.
Sales Tax Reduced:
During the budget speech, Minister of Finance of Pakistan, Shaukat Tarin, announced initiatives to encourage the usage and manufacture of electric vehicles to reduce reliance on gasoline, provide inexpensive transportation to the general population, and lessen environmental damage.
The budget was significantly favorable for the automobile sector, according to Arif Habib Limited analyst Arsalan Hanif, because the government reduced sales tax from 17% to 12.5% and eliminated the 2.5% federal excise fee (FED) on cars with smaller engines.
What’s more in the Budget?
Turnover Tax Reduced:
To help new players and businesses who are losing money, the government has reduced the turnover tax from 1.5% to 1.25%.
To achieve these aims, major tax relief measures for electric vehicles were announced, including a tax exemption on the import of fully knocked down (CKD) kits for local electric vehicle manufacture.
Excise Duty Exempted:
The government has announced that 850cc cars will be exempt from excise duty, making them more accessible to the general public.
Furthermore, as part of the government’s efforts to simplify the tariff structure, vehicle makers will be exempt from advance customs duty.
Given that the prices of locally built autos have risen beyond the average citizen’s reach, the government launched a slew of initiatives in the budget 2021-22 aimed at lowering car prices.
According to the finance minister, despite its small dimensions, the country’s vehicle business has experienced tremendous growth in recent years.
In comments to the Express Tribune, Pak Suzuki Motor Company’s official spokesperson Shafiq Ahmed Shaikh said, “These are wonderful incentives and they will undoubtedly help customers. We are grateful to the government for introducing incentives for automotive consumers.”
On the whole, the automobile sector wins the budget 2021-2022, as electric vehicle tax breaks and exemptions will encourage a more fuel-efficient and environmentally friendly economy.