The cabinet’s Economic Coordination Committee (ECC) has approved a hefty Regulatory Duty (RD) hike on Completely Built Unit of Electric Vehicles (EVs), Hybrid Vehicles, and automobiles with spark/compression ignition engines, furthering its policy of levying taxes on the auto industry.
Regulatory Duty on CBUs
The government has increased the RD on CBUs in the following ways:
- RD on conventional engines of over 850cc but less than 1,800cc increased from 15% to 50%.
- The RD on all CBU hybrids with an engine capacity of more than 1,500cc but less than 1,800cc is raised from 15% to 50%.
- A 10% RD is imposed on EVs with battery packs higher than 50kWh. Meanwhile, commercial trucks and buses are not included.
Read more: Import of completely built cars banned for 6 months as CAD gets out of control
According to reports, the RD was applied to reduce the trade imbalance caused by a high import bill. According to the figures, the government imported 26,000 vehicles in the first five and a half months of this fiscal year.
Mini-Budget and FED
The revised RD comes only days after the government suggested an increase in Federal Excise Duty (FED) on both locally assembled and completely built in its mini-budget.
The government has proposed the following for domestically assembled cars:
- Federal Excise Duty (FED) on locally produced cars with engines under 1000cc will remain 0%.
- FED increased from 2.5 percent to 5% on cars with 1001cc to 2000cc engines.
- The FED on cars with engines larger than 2000cc is now 10%, up from 5%.
Meanwhile, for completely built, the FED is as follows:
- FED will remain 0% on cars with engines under 1000cc.
- The FED on cars with engines ranging from 1001 to 1799cc will increase to 10% from 5%.
- The FED on cars with engines ranging from 1800cc to 3000cc will increase to 30% from 25%.
- The FED on cars with engines larger than 3000cc was raised from 30% to 40%.
The government has also suggested the following measures to combat ‘ON Money’:
- The advance tax on vehicle registration for cars with engines up to 1000cc will be raised from Rs 50,000 to Rs 100,000.
- The advance tax on cars with engines ranging from 1001cc to 2000cc has been raised to Rs 200,000 from Rs 100,000.
- The advance tax for cars with a power of 2100cc and above would rise to Rs 400,000 from Rs 200,000.
With these developments there will be an immense pressure on both trader and buyers’ side. Apart from that, constant changes will confuse the general public.
