Government to Present Budget 2022-23 Today
Today is the day when the federal government is going to announce the fiscal budget 2022-23. As per reports, the National Assembly session will commence at 4pm and then Finance Minister Miftah Ismail will present the budget. Like the rest of the country, the budget is going to be very important for auto industry especially in face of rupee devaluation, record-high petrol prices, expensive raw material and almost unbearable freight charges.
Current Taxes on Locally Assembled Cars
After announcing major tax reductions for locally assembled cars in budget 2021-22, including 0% Federal Excise Duty (FED) on cars up to 850, the government took these back in a mini-budget in January 2022. As per the document, following are the current FEDs on locally assembled cars:
- 2.5% on 0-1300cc cars. It is pertinent to mention that FED on 0-1000cc was 0%.
- 5% on 1301-2000cc cars. Earlier, the duty on 1001-2000cc was 2.5%; however, the government changed the categories of engine size.
- 10% on cars above 2000cc, which was 5% before the mini-budget.
Meanwhile, the Sales Tax on all cars was revised to 17%. The government took these steps to counter the rapidly increasing import bill.
Current FED on Imported Cars
Although currently, there is a ban on import of cars, here is a recap what previous government did for them in the mini-budget. Like CKD, the government increased the FED on imported/CBU cars. According to the document, following were the FED rates on imported cars.
- No change on cars with engine capacity up to 1000cc, meaning it stays at 2.5%.
- The duty on cars with engine capacity of 1001cc to 1799cc revised to 10% compared to previous 5%.
- New duty on cars with engine capacity of 1800cc to 3000cc became 30% against 25%.
- Lastly, the duty on cars above 3000cc was taken to 40% against the 30%.
Regulatory Duty on CBUs
The Regulatory Duty (RD) was also increased on the CBUs:
- RD on conventional engine cars over 850cc but not more than 1,800cc increased from 15% to 50%.
- RD on all CBU hybrids, with an engine capacity of over 1,500cc but not more than 1,800cc, increased from 15% to 50%,
- Imposition of 10% RD on EVs with battery packs of over 50kWh. However, commercial trucks and buses are not included in it.
Steps on Auto Industry by Current Government
Due to the rupee devaluation, inflation and high import bill, the current government also took some major steps for the cars and auto industry. The ruling alliance imposed a complete ban on the import of nearly 800 items in 33 categories. Used and new cars are among the banned items.
It banned the import of all used and new CBU (Completely Built-Up) cars under the SRO598. Only commercial vehicles import will be allowed. No more luxury or passenger vehicles to enter the country’s borders.
The ban will also affect the already booked cars with delivery times later than May 19, 2022. Only the vehicles, that have Bill of Lading (BL) before 19th May, will be cleared.
What is Expected Today?
Meanwhile, the government was also mulling to increase the duties on the import of CKD (Completely Knocked-Down) kits for the local assembly of cars. Reports said that the authorities had proposed to increase Regulatory Duty on cars above 1,000cc or 1,300cc cars to 100% from the current 70%.
Today’s budget will hopefully give a clear picture about the proposed RD on CKD kits. So, keep your fingers crossed and be prepared for a bumpy ride because it seems that more hard times are ahead for both masses and auto industry.
Meanwhile, there are news that the government will imposed 2.5% FED on imported cars. As per news, the duty will be imposed on imports of sports cars, off-road vehicles, golf cars, bikes, snowmobiles, support vehicles and minivans.
What are your expectations from today’s budget? Share your thought in the comments section.