The advance tax rates on motor vehicle registration and purchase from manufactures for year 2021/2022 shall be:–
(more…)Category: Automotive
PkRevenue provides stories related to automotive industry. We focus on auto policy of Pakistan. The coverage also includes sales of domestic manufacturing.
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Withholding tax exemption allowed on purchase of used motor vehicles
ISLAMABAD: Federal Board of Revenue (FBR) has said that exemption from withholding tax has been granted on purchase of used motor vehicles from general public.
The FBR while explaining major changes made to Income Tax Ordinance, 2001 through Finance Act, 2021 said that used vehicle market is working in an undocumented environment.
In order to promote documentation and corporatization of this sector has been granted exemption from withholding tax on the purchase of used vehicle from general public and reduced minimum turnover tax from 1.5 per cent to 0.25 per cent .
“Necessary changes have been made in clause (45B) of Part IV of Second schedule,” the FBR said.
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Highlights of relief in duty, taxes for import, local supply of cars
KARACHI: The government has proposed relief in duty and taxes on import and local supply of motor cars up to 850CC in order to enable lower income group to purchase the motor vehicles.
According to a commentary on budget 2021/2022 issued by KPMG Taseer Hadi & Co. Chartered Accountants, in recent years, the prices of automobiles in Pakistan have seen a sharp rise due to multiple factors, making them unaffordable for common man.
The Finance Bill 2021 proposes to rationalize the tariff structure of the automobile sector in order to address this matter in the following manner:
For motor vehicles up to 850cc, the Bill proposes to abolish import taxes including minimum value addition tax. In the case of locally manufactured vehicles with engine capacity upto 850cc, the Bill proposes to reduce sales tax from 17 percent to 12.5 percent and abolish federal excise duty.
In case of local supply of locally manufactured Electric Vehicles (EV) i.e., small cars or SUVs with battery capacity up to 50 kwh and Light Commercial Vehicles(LCV)with battery capacity up to 150 kwh, the Finance Bill 2021 proposes to levy sales tax at reduced rate of 1 percent whereas import of the same is excluded from minimum value addition tax with 25 percent reduction in custom duty till 30.06.2026.
However, import of CKD kits for these EVs is proposed to be taxed at reduced customs duty rate of 1 percent with exemption / exclusion from chargeability of sales taxand minimum value addition tax.
In addition, the Bill proposes to reduce sales tax on Hybrid Electric cars with capacity up to 1800 cc to 8.5 percent.
The Bill further proposes to reduce levy of minimum tax on turnover from 1.5 percent to 0.25 percent in case of persons engaged in sale and purchase of used vehicles while also abolishing withholding of income tax on purchase of used vehicles from general public.
However, the collection of advance tax is proposed to be made from the original purchaser who sells it without registration, at the rates ranging from Rs. 50,000 to Rs. 200,000.
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Additional withholding tax imposed on cars sold without registration
KARACHI: The application of withholding tax on cars / motor vehicles that are sold without registration shall pay additional withholding income tax.
According to the Finance Bill, 2021 the withholding tax in addition to registration/transfer would be applicable and the same would be collected by the motor vehicle registration authority of Excise and Taxation Department if manufactured motor vehicles sold prior to registration by the person who originally purchased it from the local manufacturer.
Tax analysts at KPMG Taseer Hadi Chartered Accountants said that Tax Laws (Amendment) Ordinance, 2021 inserted sub-section (2A) in Section 231B, whereby, every motor vehicle registration authority of Excise and Taxation Department shall collect advance tax at the time of sale of such vehicles from buyers of locally manufactured vehicles who sell the vehicles within 90 days of taking delivery from the local manufacturers/assemblers, whether or not registered by the respective authorities.
The rates of withholding tax on motor vehicles sold prior registration are:
Up to 1000CC: Rs50,000
1000CC to 2000CC: Rs100,000
2000CC and above: Rs200,000
The tax analysts said that above rates were applicable till June 30, 2021.
However, the Finance Bill, 2021 proposed to continue the provision. However, the restriction of 90 days is proposed to be done away with.
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Budget 2021/2022: Duty, taxes abolished on cars up to 850cc
ISLAMABAD: The government has announced abolishing duty and taxes on locally manufactured and imported cars with engine capacity up to 850cc to enable low earning families to afford motor vehicles.
Finance Minister Shaukat Tarin while presenting federal #budget 2021/2022 on Friday announced duty and tax incentives for sale and import of motor cars with engine capacity up to 850cc.
The finance minister made following announcement:
Withdrawal of FED and Reduction in Sales Tax on Locally Manufactured cars up to 850 cc: Rising prices of locally manufactured small cars is a major concern for low earning families. Accordingly, it is proposed that small cars upto 850 cc capacity may be exempted from levy of FE besides reducing Sales Tax rate from 17% to 12.5% and withdrawing value added tax.
Exemption from Withholding Tax on Import: It is proposed that no tax may be collected on imports of books, journals, agriculture equipment and motor vehicles in CBU condition upto 850 cc.
To incentives this sector further additional custom duty and regulatory duty on CBU import of vehicles upto 850cc are being exempted.
Whereas relief to existing manufacturing industry and new models is also being provided by removing Additional Customs Duty (ACD) and rationalizing the tariff structure.
Due to these targeted interventions the middle class of this country will be able to afford a car of this specific category and will accrue the benefits of governments flagship projects of “Meri Gari Scheme” which will enable many countrymen who wish to graduate from motorcycle to own their car by providing small car at an affordable price.
Moreover further incentives in the form of reduction of customs duties are also being provided to electric vehicles for one year to promote the culture of electric vehicle in Pakistan.
Similarly, keeping in view the changing international motorcycles trend usage of local manufacturing of heavy motorcycles and specific categories of trucks and tractors are also being incentivised by rationalizing the tariff structure.
Tax Incentives for promoting electric vehicles: To address environmental issues, reduce reliance on gasoline and provide cheaper source of transportation to public, Government of Pakistan is encouraging the manufacture and use of electric vehicles.
For this purpose, various tax exemptions and concessions are being proposed, which include tax exemption on import of CKD kits for local manufacturing of electric vehicles, reduction in sales tax rate on locally manufactured electric vehicles from 17% to 1%, withdrawal ofvalue addition tax on import of electric vehicles and CKD kits and withdrawal of federal excise duty on 4-wheelers electric vehicles.
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FBR collects Rs108 billion from auto sector during 11 months
ISLAMABAD: Federal Board of Revenue (FBR) has collected Rs108 billion from auto sector during first eleven months of the current fiscal year, showing 51 percent growth despite coronavirus pandemic, a statement said on Wednesday.
The FBR issued details of revenue collection from major sectors during July – May 2020/2021.
Tax revenue of Rs. 108 billion is collected from the auto sector so far which was Rs72 billion in the last year showing growth of 51 percent.
Likewise, revenue of Rs 117 billion is collected from the banks in the current year which was Rs. 87 billion last year exhibiting increase of 34 percent.
FBR has collected Rs127 billion from the cement sector in the first eleven months which was Rs97 billion last year showing increase of 31 percent.
The revenue collected from the POL is Rs. 577 billion which was Rs. 516 billion last year showing an increase of 12 percent.
From the tobacco sector, FBR has collected Rs. 129 billion revenue which was Rs. 104 billion last year thus showing an increase of 24 percent.
The revenue from sugar sector was Rs. 53 billion which was Rs. 31 billion last year showing a growth of 74 percent.
The Customs duty collections in the current year from the major items include vehicles, Iron Steel and Machinery and mechanical appliances.
Customs duty of Rs. 98 billion is collected from vehicles which was Rs. 52 billion last year showing an increase of 86 percent.
Customs duty from Iron and Steel remained Rs. 53 billion which was Rs. 42 billion last year showing a growth of 24 percent.
Similarly, Customs duty from machinery and mechanical appliances is Rs. 38 billion which was Rs. 30 billion last year in the same period thus showing a growth of 26 percent.
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Car sales climb up by 54pc in 10 months
KARACHI: Sales of domestic assembled cars have increased by 54 percent during first 10 months of the current fiscal year due to smooth production despite coronavirus threats.
According to statistics released by Pakistan Automobile Manufacturers Association (PAMA), 151,178 units were sold during July – April 2020/2021 as compared with 97,900 units sold in the same period of the last year.
The sales of Indus Motors posted 90 percent growth to 48,025 units during first 10 months of the current fiscal year as compared with 25,300 units in the same period of the last year.
The sales of Honda Cars recorded 71 percent growth to 23,985 units during July – April 2020/2021 as compared with 14,061 units in the same period of the last year.
The sales of Pakistan Suzuki Motors Company (PSMC) recorded 28 percent growth to 74,619 units during first 10 months of the current fiscal year as compared with 58,303 units in the same period of the last year.
The sales of Hyundai cars, which entered the domestic market last year, were at 4,549 units during the first 10 months of the current fiscal year.
Analysts at Topline Securities said that Car sales declined by 17 percent month on month (MoM) in April 2021, affected by the start of the month of Ramadan and supply-side issues.
The same, including Lucky Motors Corporation (KIA, non-member of PAMA), is down by around 16 percent MoM.
To highlight, amid countrywide lockdowns imposed by the Federal and Provincial governments in Mar/Apr-2020, no car sales were recorded during Apr-2020.
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Motor vehicle tax collection grows by 22.7pc; finance ministry issues nine-month statistics
ISLAMABAD: The collection of motor vehicle tax has been increased by 22.7 percent owing to better economic conditions during the current fiscal year as compared with unfavorable conditions in the last fiscal year due to corona pandemic.
According to statistics released by the ministry of finance for the period July – March 2020/2021, the collection of motor vehicle tax increased to Rs20.53 billion during the first nine months of the current fiscal year as compared with Rs16.73 billion in the same months of the last fiscal year.
The economic conditions were not encouraging at the start of the last fiscal year and later the coronavirus related lockdown adversely impacted commercial and financial activities.
The provinces have jurisdiction over the collection of motor vehicle tax.
The province wise collection revealed that the Punjab had posted 15.18 percent increase in motor vehicle tax collection during the period under review. The province collected Rs11 billion during July – March 2020/2021 as compared with Rs9.55 billion in the corresponding period of the last fiscal year.
The province of Sindh collected Rs7.55 billion during July – March 2020/2021 as compared with Rs5.52 billion during the corresponding period of the last fiscal year, showing an increase of 36.27 percent.
Khyber Pakhtunkhwa registered an increase of 9.65 percent to Rs1.25 billion during first nine months of the current fiscal year as compared with Rs1.14 billion, showing an increase of 9.65 percent.
The province of Balochistan posted the highest growth of 43.13 percent to Rs0.73 million during July – March 2020/2021 as compared with Rs0.51 million in the same period of the last fiscal year.
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PM hopes car scheme to generate demand for domestic industry
KARACHI: Prime Minister Imran Khan paid rich tribute to Overseas Pakistanis for their overwhelming response to the Roshan Digital Account (RDA). He said their support and vote of confidence have been pivotal in making the initiative a big success within a short period of time, according to a press release issued by State Bank of Pakistan (SBP) on Thursday.
The prime minister was addressing a gathering of ministers, CEOs of car manufacturers and insurance companies, heads of leading charities, presidents of banks, SBP officials and other distinguished guests to celebrate the $1 billion mark in RDA deposits and to launch two additional products specially created for Overseas Pakistanis through RDA—Roshan Apni Car and Roshan Samaaji Khidmat.
The success of RDA and today’s addition of further products under this scheme demonstrate that if the public and private sector work together in a spirit of cooperation, any project is bound to succeed, he added.
The Prime Minister appreciated the out-of-the-box approach of the SBP and the banking industry in digitally connecting Overseas Pakistanis to the Pakistani banking system and economy through RDA. He also lauded the continued innovation they are showing through the addition of the Roshan Apni Car and Roshan Samaaji Khidmat products.
He hoped that the Roshan Apni Car initiative would not only help Overseas Pakistanis to fulfill the needs of their loved ones in Pakistan but would also create additional demand for the car industry that will in turn help them and connected industries to grow at a faster pace.
He was also confident that Roshan Samaaji Khidmat will be able to provide a convenient one stop donation platform for Overseas Pakistanis to meet their charitable giving goals and Zakat obligations. Appreciating the spirit of charity demonstrated time and time again by Overseas Pakistanis, he noted that these additional funds will help social sector organizations and NGOs to help an even larger number of disadvantaged people in Pakistan. The Prime Minister was especially pleased to note that, for the first time, Overseas Pakistanis will now also be able to contribute to “Ehsaas”, the government’s internationally acclaimed poverty alleviation program, through Roshan Samaaji Khidmat.
In his welcome address, Governor SBP, Dr. Reza Baqir, thanked the Honourable Prime Minister for his vision of connecting the Pakistani diaspora through financial services and for his constant encouragement and guidance.
He said he was feeling proud today that banks were able to receive $1 billion in deposits through RDA in such a short period of time. Recalling the launch of RDA in September 2020, he said that the first major milestone of receiving $500 million was passed after five months.
After only another two months, the $1 billion mark has been crossed, demonstrating the accelerating pace inflows. He noted that more than 120,000 Roshan Digital Accounts have been opened from 170 countries around the world.
He remarked that deposits through these accounts were providing a brand new source of foreign exchange inflows that were helping to improve Pakistan’s foreign exchange reserves and balance of payments position. He appreciated the hard work of all the staff and senior management of both the banks and SBP, noting that their dedication and spirit of constant innovation have been critical to the success of the initiative.
Roshan Digital Account was conceived to offer lifestyle banking products in Pakistan to Overseas Pakistanis, including money deposit facilities, investment opportunities in Naya Pakistan Certificates, the stock market and real estate, as well as other day to day payment facilities. This suite of lifestyle products is being constantly expanded, with today’s launch of Roshan Apni Car and Roshan SamaajiKhidmat being the latest example.
Roshan Apni Car has been specially designed for Overseas Pakistanis and has many distinguishing features. For the first time in the history of the banking industry, an RDA holder will be able to apply for car financing for their loved ones in Pakistan completely digitally. Processing time will be fast. Financing and insurance will be available at very attractive rates, and in both conventional and Shariah compliant forms. Moreover, car manufacturers have committed to significantly slashing the car delivery time for RDA holders.
Roshan SamaajiKhidmatis a one stop payment platform to enable Overseas Pakistanis to make donations to leading charities, hospitals and educational institutes in Pakistan, as well as to meet their Zakat obligations. In addition to these private sector organizations, SBP also worked closely with Special Assistant of the Prime Minister of Pakistan on Poverty Alleviation and Social Protection, Dr. SaniaNishtar, and her team to integrate “Ehsaas”, the government’s flagship poverty alleviation program, with the Roshan Samaaji Khidmat portal.
As a result, private participation in one of the world’s most acclaimed poverty alleviation programsis being made possible for the first time.
Through Roshan Samaaji Khidmat, Overseas Pakistanis are being given the opportunity to make direct contributions to the program. In so doing, they would be providing vital support to the government’s efforts to lift millions of their fellow Pakistanis out of poverty.
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Pak Suzuki posts sharp 285pc growth in first quarter
KARACHI: Pak Suzuki Motors Company Limited on Thursday announced an unprecedented growth of 285 percent in gross profit to Rs2.21 billion during the first quarter (January – March) of 2021.
The company declared the gross profit of Rs573 million in the same quarter of the last year.
The sales of the company sharply grew to Rs36.1 billion for the quarter ended March 31, 2021 as compared with Rs17.74 billion in the same quarter of the last year.
With the higher sales, the distribution and marketing expenses of the company also increased to Rs710 million during the quarter under review as compared with Rs320 million in the same quarter of the last year.
The company declared profit from operations at Rs1.12 billion during January – March 2021 as compared with loss of Rs1.32 billion in the same quarter of the last year.
The net profit of the company was at Rs778 million during first quarter of 2021 as compared with net loss of Rs941 million in the corresponding quarter of the last year.
The company declared earnings per share at Rs9.45 for the period ended March 31, 2021 as compared with net loss of Rs941 million in the corresponding period of the last year.