The 2023-24 budget has generated extensive discussions in Pakistan, but it holds little significance for the automotive sector. Details have revealed that the incumbent government plans to proceed with the existing plan outlined in the Automotive Industry Development and Export Policy (AIDEP) 2022-26, with no new jump or slump in tax for new cars.
Considering all this episode, here we come with a blend of good and bad news for those who plan to buy a new car. Earlier, it was expected that the budget would introduce higher Advance Income Tax, Capital Value Tax, and Custom Duty rates for new cars in Pakistan. Fortunately, the tax document does not include any such provisions. Therefore, the good news is that car prices may not rise due to potential increases in the aforementioned tax rates.
However, the government has not provided any relief to the car industry amid the ongoing economic crisis. Consequently, the unfortunate news is that car prices will not decrease in the foreseeable future. The industry is poised for a challenging new fiscal year, with car manufacturers struggling to survive. Given these circumstances, the likelihood of new launches or developments seems highly improbable.
Furthermore, the government has imposed 35% customs duty on car parts that play a vital role in safety, comfort and other functionalities – deny their significance and importance in cars.
35% Customs Duty Imposed on Car Parts
As per the details outlined in the budget 2023-24 document, a 35% customs duty rate has been set for the import of car components. Surprisingly, this rate applies uniformly to all car parts, regardless of their complexity or importance in the overall functioning of the vehicle.
These parts play crucial roles in ensuring safety, comfort, performance, and functionality.
- Protective strips
- Luggage compartments
- Interior panels and padding
- Water and air hoses and channels
- Bumper and impact braces
- Spare tires and parts thereof
- Bodywork
- Mounts, clamps, dampeners, and other fitment components
- Engine and transmission assembly
- Suspension and brake components
- Wheels and tires
- Exhaust system
- Electrical components
What do you think about custom duty inflicted on these parts and news regarding auto industry policy explained in budget 2023-24?
