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The Long Wait Is Over! Pakistan’s Auto Policy for the Years 2021-2026 Is Here

The Long Wait Is Over! Pakistan’s Auto Policy for the Years 2021-2026 Is Here

July 7, 2021 / By Zunair Tahir / News Pakistan

Auto Policy has finally been revealed by the federal government. Khusro Bakhtiar, the Federal Minister for Industries and Production, spoke during a news conference on the new strategy.

We’ve been hearing a lot of stories and speculations concerning automobile price increases in Pakistan. Despite repeated warnings, the situation for automobile users in the country remained uncertain. The wait, however, is now over. Pakistan’s new Auto Policy 2021-2026 has been announced by the government. According to the information given, there is undoubtedly good news for automobile aficionados. Furthermore, the new Auto Policy is good news for automobile buyers in the lower middle and middle classes. Let’s go straight into the specifics!

Impact On Cars

Vehicle Prices Have Dropped

The long-awaited decision has finally arrived. Vehicle costs have been decreased as a result of the new Auto Policy. Vehicles with engines up to 850cc would have their costs reduced to as low as PKR 105,000 under the new policy. When it comes to 1000cc vehicles, costs might drop as low as PKR 146,000. Furthermore, if we look at the Toyota Yaris and Honda City in particular, the costs will drop by up to PKR 125,000.

Here is the Auto Policy for the Years 2021-2026.

  • In the following 1-2 days, new car prices will be applied.
  • To put an end to the “ON Money” mentality, the buyer must register the vehicle in his or her own name.
  • 3,75,000 new employment will be created in the auto industry.
  • The auto sector has a production capacity of 4,15,000 vehicles per year. Pakistan manufactured 1,64,000 cars last year.
  • Cars with engines up to 850cc will have their prices reduced by up to Rs. 105,000.
  • 1000cc rates would be reduced by up to Rs140,000.
  • For one year, the import tariff on electric vehicles (EVs) would be cut from 25% to 10%.
  • If the automobile is delayed for more than 60 days (2 months), the firm will be charged KIBOR + 3%.
  • The automobile industry is taxed to the tune of Rs350 billion.
  • The government is working on a policy for auto development and export. Not only will the policy be focused on the domestic market.

Impact of Budget On Auto Sector 2021-22

Impact of Budget On Auto Sector 2021-22

Posted By Zunair Tahir 12 June 2021 / News Pakistan

The budget for 2021-22 has been revealed, revealing a number of anticipated policy changes. There has been speculation regarding the changes that are expected in the new auto policy, since it has been widely reported that local vehicle prices may finally stabilize.

The government has announced that the Federal Excise Duty (FED) on domestically built cars with an engine displacement of 850cc or less has been eliminated. Prior to the development, the duty rate was 2.5 percent. Federal Finance Minister Shaukat Tareen also stated during the session that the sales tax on the aforementioned sector of automobiles has been reduced from 17 percent to 12.5 percent, resulting in a 4.5 percent reduction in tax rates.

Under these 03 programmed, old and secondhand Asian-made vehicles can be imported against payment of the following amounts:

S.No.Vehicles of Asian Makes meant for transportation of personsDuty and Taxes in US$ or equivalent amount in Pak
01.Upto 800 ccUS$ 4,800
02.801cc to 1000ccUS$6,000
03.From 1001 cc to 1300ccUS$13,200
04.From 1301cc to 1500ccUS$18,590
05.From 1501cc to 1600ccUS$22,550
06.From 1601cc to 1800cc (Excluding Jeeps)US$27,940

According to reports, HM Shehzad, Chairman of the All Pakistan Motor Dealers Association (APDMA), recently recommended that the government make modifications to the new car policy that would be adopted when the 2021-22 budget is presented.

Electric vehicles:

Electric car imports would be free from VAT, but domestically made electric vehicles will be subject to a 1% sales tax.
The government would also levy a “on money” tax on automobiles that are sold without being registered. “On money” or premium refers to a procedure in which anxious customers with extra funds pay a premium to vehicle dealers in exchange for immediate delivery rather than waiting months.

Tarin proposed measures for electric vehicles during his budget address, saying that the government was supporting the usage and manufacture of electric vehicles to reduce reliance on gasoline, offer inexpensive transportation to the general people, and minimise environmental effect. To achieve these aims, substantial tax relief measures for electric cars were proposed, including a tax exemption on the import of fully knocked down (CKD) kits for local electric vehicle production.

In addition, the sales tax on domestically made electric vehicles was reduced from 17 percent to 1 percent, while the value added tax on imported electric vehicles was eliminated. Electric cars will also be exempt from federal excise taxes. Hanif emphasized that tax breaks and exemptions for electric cars will help to create a more fuel-efficient and environmentally friendly economy.


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