Under the new Auto Policy (2021-2026), the federal government reduced the sales tax on all cars to 12.5% from 17%, along with a 2.5% reduction in Federal Excise Duty (FED) from July 1st, 2021. It means all invoices after this date will have the new tax reductions. One of the biggest beneficiaries of this policy is Pak Suzuki, but it seems that the company is not ready to transfer this benefit to the buyers.
According to reports, the car manufacturer is still receiving 17% Sales Tax as several customers have shared their invoices with us. As per these invoices, the company has reduced the FED as per the auto policy; however, the sales tax is still standing at 17%. Furthermore, when customers raised the issue, the company said it had already paid the sales tax on these cars, which doesn’t make any sense because you pay the sales tax after the product’s sale. Many of these customers have objected to this, but there is no positive response by the company.
Response by Pak Suzuki:
Meanwhile, PakWheels have contacted the Suzuki officials for a comment on the issue; however, there was no reply.
Suzuki Bookings:
Another important aspect of this whole scenario is that most companies, including Pak Suzuki, stopped bookings in June 2021. Apparently, the step was taken to start sales after the implementation of a new auto policy. And despite the wait, the new reduction on Sales Tax has not been implemented by the company.
The company must stop this practice and transfer the benefit to the customers. The government has taken a great step under the new policy, but if the customers are not benefited, there is no point. Also, the government needs to take serious steps to counter such practices.
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Cars that were booked before 30th of June, 2021 will not get any relief on the sales tax no matter if they were delivered and invoiced after 1st of July, 2021 or after the implementation of the new auto policy… Suzuki Pakistan has already deposited the sales tax of such cars to the Government of Pakistan in advance.
It is a technical issue rather than a malicious act on Suzuki Pakistan. So we shouldn’t blame Suzuki for this…
The topic of this blog post is misleading and will damage the repute of the company. Companies are meant to pay sales tax to the Government on monthly or quarterly basis depending upon their category.
The author was supposed to do a little bit of research before posting this article on a leading Pakistani automotive platform. Is there any evidence that Suzuki is still charging 17% sales tax on the cars below 1000cc that were booked after 1st of July, 2021?
Suzuki may have generated invoices for all cars that were booked before 30th of June, 2021 but Suzuki passed the maximum benefit in its capacity to its customers by holding the invoices and generated them after 1st of July, 2021 to provide relief on FED and the vehicle base price.
Chutia bana rai hai company Govt should take action against Pak Suzuki I booked my Alto VXL in May and still not received but showroom said only FED will reduce why
As per the law of the land, i.e. The Sales Tax Act, 1990
Section 44 of Chapter 1
a) Time of Supply: a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply (or the time when any payment is received by the supplier in respect of that supply, whichever is earlier).
Section 5 of Chapter 2
Change in the rate of tax:
If there is a change in the rate of tax;
a) a taxable supply made by a registered person shall be charged to tax at such rate as is in force at the time of supply.
Suzuki has only charged 17% sales tax on the cars below 1000cc that were booked before 30th of June, 2021 and as per the law of the land.
The Sales Tax Act, 1990: https://download1.fbr.gov.pk/Docs/2020812168165722SalesTaxAct,1990updatedupto(30.06.2020)–.pdf
As per the Sales Tax Act, 1990 (that was enforced until 30th of June, 2021)… A sale is considered to be made if the delivery of the product is made by the supplier or a payment in respect of that product is received by the supplier, whichever comes first!