The federal government is all to present the Fiscal Budget 2023-24 today in the parliament. According to media reports, Finance Minister Ishaq Dar will announce it at 4 pm in National Assembly. It would be one of the toughest budgets due to severe economic and political instability in Pakistan. If we look at the automobile sector, the situation has gone from bad to worse due to the non-issuance of Letters of Credit (LCs), difficulties in importing raw materials, and the volatile US dollar rate. This has resulted in thousands of layoffs, production plant shutdowns, repeated price increases, and, above all, a threat of leaving some companies from Pakistan.
Possible Announcement for Automobile in Budget 2023-24
According to media reports and industry experts, there would not be any major announcement regarding the automobile industry in Fiscal Budget 2023-24. It means there is a low chance that the government will impose any new tax or duty on the car sector. However, earlier reports suggested that the finance ministry is planning to set heavy Advance Income Tax on non-filers. They claimed the Pakistan Business Council (PBC) has indicated that the Federal Board of Revenue (FBR) implement a higher advance tax on them.
A Recap of Budget 2022-23
To refresh your memories, here is a Fiscal Budget 2022-23 recap for our readers. In the last budget, the government proposed the following taxes in the first draft:
- Capital Value Tax (CVT) on cars above a price tag of Rs. 5 million.
- Withholding/Advance Tax on luxury vehicles
However, when the budget was passed, the CVT was dropped from 2% to 1%, but the government imposed it on cars above 1300cc, increasing the tax net.
Mini-Budget
After the fiscal budget, the government announced a mini-budget in January 2022. It imposed Federal Excise Duty (FED) and General Sales Tax on cars, along with setting Regulatory Duty (RD) on imported cars.
In conclusion, both the fiscal and mini-budget of the previous year didn’t bring good news for the auto industry as heavy duties were imposed on it, resulting in more downgrade. Hopefully, the current government will not implement any new tax for the automobile industry because it is already facing serious issues. Suzuki Pakistan and PAMA have already asked the government not to introduce any further duties. Let’s see how the finance ministry responds to these appeals, as everything will be revealed at 4 pm today.
