Are 1000cc Cars Really Getting Cheaper?
Last week, Finance Minister Shaukat Tareen announced in parliament, “After review, we have also reduced the prices of not just 800cc cars but also 1000cc.” However, the minister didn’t specify which duties and taxes would be reduced. And this started a mill of rumours as people and outlets started their own analysis. Some media outlets reported, like 850cc, the government has reduced both Sales Tax and Federal Excise Duty (FED) on 1000cc cars, and some even presented the new expected prices. But the question is, are 1000cc cars really getting cheaper?
The answer to this question is somewhat unclear because the government has not presented any official numbers for this it. Earlier, in the fiscal budget 2021-22, the government gave a complete detail of tax reduction on 850cc cars, including abolishing FED and reducing sales tax from 17% to 12.5%. But this is not the case for 1000cc vehicles.
Undoubtedly, we all want this to happen, but we think everyone should wait for the confirmed news and detailed announcement from the government.
Proposals for Upcoming Auto Policy (2021-2026)
As per our sources, the price reduction for 1000cc cars is a proposal for the upcoming Auto Policy (2021-2026). The proposal has been presented by Engineering Development Board (EDB). Furthermore, the reports suggested that the government will include these proposals in Finance Bill 2021. The sources have also claimed that all the cars (even above 2000cc) will get cheap. Like 850cc, the proposal suggested a 2.5% cut in FED for all cars. “There FED on 1000cc-2000cc cars will reduce to 2.5% from 5%, while it will be cut to 5% from 7.5% for cars above 2000cc,” the source claimed.
And the good news is that the government will present Finance Bill 2021 within the next couple of days. So, our suggestion is to wait for the detailed announcement by the government, and then make a decision for buying a car. We are pretty sure that the cars will get cheaper, but the question is, how much? and what will be procedure?
Will the Benefit Reach to Consumers?
This is a serious question, whether the benefit in tax reduction will reach the final consumers or not? There is no price control authority in Pakistan for the automobile industry, and the car manufacturers could increase the base price to increase their profits. And in this case, the consumers will not get the benefit of these steps by the government. The government need to remain very vigilant and keeps a close eye on these companies and make sure that the buyers will get the benefit of this policy.