Pakistan’s local auto manufacturers are working at maximum capacity and yet not fulfilling the demands of local consumers and market. That is why many consumers buy imported cars, which features better specifications and are less expensive. There are three ways to import (used) cars in the country, which are as follow;
- Personal Baggage Scheme
- Gift Scheme
- Transfer of Residence
Personal Baggage Scheme and Transfer of Residence: Under the Baggage and Transfer of Residence schemes non-resident Pakistanis (Pakistani Nationals) can bring or import cars in the country. It is pertinent to mention here that people who are importing cars think that vehicles coming through these schemes are duty-free. However, this is not the case; one has to pay the customs duty.
Gift Scheme: Under this scheme, non-resident Pakistani can receive/send/gift used car to anyone living in Pakistan. The receiver can easily get the car by paying customs duty.
Here are few conditions if one use these schemes.
• Once in two years
• Not more than three years old model (Year of manufacturing)
• Importer Period of Stay outside Pakistan: Under Transfer of Residence and Gift Scheme a minimum of 700 days stay outside Pakistan during the immediately preceding three years from the date of application. While under the Personal Baggage Scheme a minimum of 180 days stays outside Pakistan during the immediately preceding seven months from the date of application.
Also Read: Dissecting the new regulatory import tax on automobiles in Pakistan
Over the time people have abused these schemes for their benefit. People send money using the hundi method to the people living abroad, mostly working class, to use their passport to import cars in the country, which is affecting the overall economy—in simple terms using an illegal method like Hundi to receive/send money leads to a devaluation of currency and inflation. Furthermore, Pakistan is an export deficit country—meaning its exports are less than imports. So to curb the problems like the export deficit, devaluation of currency and to strengthen car import schemes Government of Pakistan has amended IPO-2016 and has issued new SRO1067 (I)/2017 dated 20-10-2017.
In IPO-2016, APPENDIX-E (i.e., PROCEDURE FOR IMPORT OF VEHICLES UNDER THE PERSONAL BAGGAGE, TRANSFER OR RESIDENCE AND GIFT SCHEMES), sub-paragraph (5) of paragraph (3) is now amended as below;
All vehicles in new/used condition to be imported either under personal baggage or gift scheme, their duty and taxes will be paid out of foreign exchange arranged by Pakistan nationals themselves or local recipient supported by bank encashment certificate showing the conversion of foreign remittance to local currency. In layman terms, the amount of duty on imported cars shall also come from abroad, and also its money trail shall also be disclosed.
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Government is taking this step to stop the amount of foreign currency going out of the country, which will lead to stability of the currency and will also decrease export deficit of the country. Moreover, it will be hard for people to misuse these schemes (baggage/gift scheme). Foreign remittance of the country will increase eventually. In my opinion, this is a right approach by the government. However, from the consumers’ perspective it is not a good policy as local manufacturers are not fulfilling the need of local consumers, so they have to import vehicle, but according to this new SRO, it will be difficult and expensive to import cars. Let’s wait and see how consumers react to this news.
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