Calculation of duty on used car imports revised: Prices of imported cars set to increase

Duty on Import of Used Cars in Pakistan

Federal Board of Revenue has revised the calculation of duties imposed on used cars. No changes have been implemented on the duty and tax imposed on used car imports, neither is there any change in the age of old and used car imports.

In simple words, five years old cars can still be imported on the previous duties and taxes however, calculation of date on the import of old and used vehicles is revised.

Previously, depreciation was calculated at the rate of 2 percent per month on old and used imported vehicles for each completed month which was calculated from the date of first registration abroad up to the date of entry into Pakistan, now though, the 2 percent depreciation will be calculated on each completed month from the first day of January of the year subsequent to the year of manufacture till the date of shipment as per bill of landing.

Roughly translated, cars of age five years old can be imported however depreciation of two percent per month shall be applied on the year, following the year of the car’s manufacture. For example; If a 2005 model car is imported, than depreciation charges will be applied on it from 2006 unlike previously, where depreciation charges were independent of model year and were applied from the date of registration abroad.

H M Shahzad, a leading dealer of cars said that the prices of used imported cars are set to increase by Rs 60,000 to 260,000 on different models after the government slashed depreciation allowance by 12 percent to 48 percent on Friday.

Speaking further that the government has increased the duties on the imported cars to stop the import of cheap cars in the country for customers.

He added that the increase in duty will reflect on price hike on cars models from 600cc to 1000cc by Rs 26,000 whereas different brands of 1200cc to 1800cc will see the increase of Rs 260,000 in prices.

This added cost will be transferred to the consumers on not only the cars which will soon be imported and cleared from the port on this new calculation criteria, but dealers and importers will take advantage and increase the prices on cars which weren’t imported under this calculation criteria as well.

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