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Category: Automotive

PkRevenue provides stories related to automotive industry. We focus on auto policy of Pakistan. The coverage also includes sales of domestic manufacturing.

  • Motor vehicle tax collection grows by 15pc to Rs12.7 billion in 1HFY21

    Motor vehicle tax collection grows by 15pc to Rs12.7 billion in 1HFY21

    ISLAMABAD: The collection of motor vehicle tax has increased by 15 percent to Rs12.7 billion during the first half (July – December) of 2020/2021 owing to improved business and commercial activities after ease in coronavirus lockdown.

    According to official statistics made available on Saturday, the motor vehicle tax collected by all the provinces increased to Rs12.7 billion during the first half of the current fiscal year as compared with Rs11 billion in the corresponding half of the last fiscal year.

    Province wise collection data revealed that Punjab had contributed the major chunk under this head. The Punjab province collected Rs7.08 billion as motor vehicle tax during first half of the current fiscal year as compared with Rs6.52 billion in the corresponding half of the last fiscal year.

    In terms of growth, the Sindh province registered an increase of 28.48 percent to Rs4.28 billion during the period of July – December of the current fiscal year as compared with Rs3.33 billion during the same period of the last fiscal year.

    The collection of motor vehicle tax by the province of Khyber Pakhtunkhwa registered an increase of 2.24 percent to Rs865 million during the first half of the current fiscal year as compared with Rs846 million in the corresponding half of the last fiscal year.

    The Balochistan province collected Rs413 million as motor vehicle tax during July – December 2020/2021 as compared with Rs303 million in the same period of the last fiscal year.

  • Import of CKD motor vehicles witnesses unprecedented growth

    Import of CKD motor vehicles witnesses unprecedented growth

    ISLAMABAD: The import of motor vehicles in Completely Knock Down (CKD) condition has witnessed a unprecedented growth of 4902 percent in December 2020 due to acceleration of manufacturing activities by auto industry in the country.

    According to Pakistan Bureau of Statistics (PBS), the import of motor vehicles in CKD/Semi Knock Down (SKD) condition increased to $107 million in December 2020 as compared with meagre $2.14 in the same month of the last year.

    The country’s car industry witnessed significant downfall during the last year due economic slowdown and adverse impact of coronavirus.

    The economy during the first half of the last year had witnessed consolidation and shown improvement in early 2020. However, the coronavirus which detected in last months of 2019 in China adversely affected the world as well as domestic economy.

    The car manufacturing in the country has witnessed growth during the first half of the current fiscal year. However, the pace of manufacturing grew at a faster pace in the last months of the first half of the current fiscal year.

    The car production is major component of Large Scale Manufacturing (LSM) as this industry grew by 1.97 percent in November 2020 over the corresponding month of the last year.

    Meanwhile, car sales, as reported by PAMA, increased by 15 percent YoY in December 2020 to 13,870 units.

    The same, including Lucky Motor Corporation (KIA, non-member of PAMA), is up by 20 percent YoY.

  • Car sales increase by 18 percent during first half

    Car sales increase by 18 percent during first half

    KARACHI: The sales of domestically manufactured cars have registered 18 percent growth to 78,910 units during first half (July – December) 2021/2021 as compared with 67,019 points in the half of the last fiscal year.

    The increase in cars sales during the first half mainly attributed to addition of 1,169 units manufactured by new entrant Hyundai, according to data released by Pakistan Automotive Manufacturers Association (PAMA) on Monday.

    The sales of Pakistan Suzuki fell by 15 percent to 37,936 units during the first half of the current fiscal year as compared with 44,698 units in the same period of the last fiscal year.

    However, sales of Indus Motors posted strong 84 percent growth to 26,139 units during the first half of the current fiscal year as compared with 14,175 units in the corresponding half of the last fiscal year.

    The sale of Honda Cars also registered increase 68 percent to 13,666 units during July – December 2020 as compared with 8,146 units in the same period of the last fiscal year.

    Car sales, as reported by PAMA, increased by 15 percent YoY in December 2020 to 13,870 units. The same, including Lucky Motor Corporation (KIA, non-member of PAMA), is up by 20 percent YoY.

    Indus Motor (INDU) and Honda Car (HCAR) registered sales increases of 72 percent YoY and 76 percent YoY, respectively. Pak Suzuki’s (PSMC) sales declined by 13 percent YoY.

    New entrants into Pak Auto space Hyundai Nishat sold 511 units (+8 percent MoM) in Dec-2020, while Lucky Motor sold around 600 units, as per our channel checks.

  • Association hails decision to probe high car prices

    Association hails decision to probe high car prices

    KARACHI: Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has welcomed the decision of the government for probing higher automobile prices in the country.

    The high prices are mainly due to lower content of localized parts and government’s strict tariff and taxation policy.

    In a meeting held on Saturday, the senior PAAPAM members endorsed the Federal Cabinet direction to launch inquiry in this regard, saying the rates of vehicles can be reduced through full implementation of localization regime.

    The imposition of regulatory duty, additional customs duty, devaluation of rupee and higher federal excise duty are major burden on the consumers of cars, they added.

    “As the existing Auto Policy is to expire by the midyear, right away triggering preparations for AIDP 2021-26, it is right time to give a complete shake up to the stagnant system regulating the Automotive regime, to bring transparency and credibility to the procedures,” they demanded.

    The participants of the meeting observed that Prime Minister Imran Khan has rightly pinpointed the issue, because the country is being exploited as a consumer country instead of manufacturing country. We need to “Make in Pakistan” not “Assemble in Pakistan”, they stressed.

    PAAPAM fears that in absence of a transparent import regulatory system for automotive parts economic situation will have a further dip with New Entrants, coming into field and launch of Electric Vehicles (EVs) being on the doorstep.

    The participants of the meeting said that the entire industry is dependent upon unregulated imports resulting in higher car prices.

    They lamented that in spite of having exclusive Pakistan’s domestic market for over three decades the country has failed to achieve anticipated localization targets, leading enormous foreign exchange outflows in exchange of costly parts’ import, having no check at all.

    “It’s the time to deeply analyze the root cause of high prices of cars in the country and devise a long-term strategy to timely produce the vehicles in line with demand, besides devising and implementing 10-year ‘Auto parts localization policy’ (APLP) to ensure the localization of all value-added parts.”

    They said that it would result in cost reduction, reduction in lead time parts availability to assemblers and vehicle availability to consumers.

    Moreover, these measures will create technology awareness, generating skilled jobs for local youth, reducing revenue loss to the government exchequers, besides forcing the OEMs to invest in inspection & testing labs to reduce lead time for approval of locally developed auto parts.

    They said that the trio-government regulators in the automotive Sector namely EDB (Engineering Development Board)/MOI&P, MOC and FBR have yet to devise a transparent and coherent system for regulating imports of CKD Kits for lot many variants of vehicles locally assembled.

    They said that the EDB, with its meager resources may not singularly handle the gigantic task of classifying Automotive Parts import, directly affecting vehicle prices, promoting the local industry and watching financial interests for national exchequer.

  • Proposed new tax on car purchase resented

    Proposed new tax on car purchase resented

    KARACHI: An association of industries and traders has resented proposed plan of the government to impose a new tax on purchase of motor vehicles.

    Pakistan Industrial and Traders Association Front (PIAF) has voiced its serious concern over the imposition of new tax on the sale of new cars to control ‘On Money’ practice, saying the move will further enhance the prices of already world most expansive Pakistani four wheelers, said a statement.

    PIAF chairman Mian Nauman Kabir said that the government has decided to impose up to Rs200,000 additional withholding tax on the purchase of new cars on the plea of discouraging ‘On Money’ but actually the move has been aimed at achieving FBR’s target of tax collection.

    He said that the locally-assembled cars are very expansive mainly due to exorbitant government taxes and high profit margins of the assemblers despite the fact that their quality is very low.

    The additional withholding tax of up to Rs200,000 will put more burden on the consumers, who are already buying the very costly vehicles as compared to rest of world.

    He said that the consumers were upset due to unnecessarily long delivery time for vehicles by the manufacturers. In order to discourage the practice of “on money” the government, instead of taking some solid measures, has imposed additional Withholding Income Tax, which does not seem to be logical.

    He said that government can control prices by checking various costs and then ensuring 20 or 30 percent profit of the company.

    “Right now car manufacturers have 1-year advances, which is more than their total investment,” he said.

    “Secondly, the government can definitely intervene to ensure quality, as a car carries a human being and human life is dependent on its quality. The companies in India, Canada or USA have different features and different safety modes and features. Same models in Pakistan have almost zero safety features whereas price in Pakistan is much higher. Let’s forget price for sometimes but at least give us a safe vehicle with less oil consumption,” he argued.

    He said that nowadays 25 percent of the price is being charged in the name of on money. Even if you pay 100 percent you cannot get a car and have to pay ‘ON’ in lakhs, which is almost 25 percent of the total price that is right under the government nose and in knowledge of the concerned authorities, he added.

    PIAF leader appealed the government to devise some mechanism to regulate the automotive sector in view of the quality as well as the prices in consultation with all stakeholders including the industry as well as the consumers.

    Mian Nauman Kabir said that local manufactures revise their cars prices whenever they desire and that too without getting due approval from any authority, which affect the common people badly.

    The Engineering Development Board (EDB) will have to devise some rules and regulations to benefit the consumers along with securing the interest of the auto assemblers in the upcoming auto policy, he said. PIAF also suggests the Senate Standing Committee on Industries and Production to take the notice of exorbitant and ever-soaring prices of cars in Pakistan along with illegal practice of charging ‘on money’ or premium, he added.

    The Senate Standing Committee on Industries and Production, the Engineering Development Board, FBR, Pakistan Automotive Manufacturers Association and major Consumers Welfare Associations should sit together and finalize some mechanism to bring down the prices of automobiles in line with the rates of international market, by revising profit margins and decreasing taxes and duties in the larger interest of the public.

  • FBR updates rates of duty, tax on import of vehicles

    FBR updates rates of duty, tax on import of vehicles

    ISLAMABAD: Federal Board of Revenue (FBR) has issued updated rates of duty and tax for customs clearance of imported vehicle.

    The Federal Government of Pakistan has extended various benefits / exemptions to the taxpayers for importing vehicles, according to updated rates up to June 30, 2020.

    The details concessions / exemptions are given as under:-

    i. S.R.O. 577(I)/2005 Dated 06.06.2005 (Exemption from customs duty, sales tax, withholding tax on import of certain specified Old and used automotive vehicles)

    The import of old and used automotive vehicles of Asian makes meant for transport of persons, specified in column (2) of the Table below, falling under PCT heading No. 87.03 of the First Schedule to the Customs Act, 1969 (IV of 1969), is exempted from so much of the customs-duty, sales tax and withholding tax as are in excess of the cumulative amount specified in column (3) thereof,

    Sr. NoAutomotive vehicles of Asian makes meant for transport of persons.Duty and taxes in US$ or equivalent amount in Pak rupees.
    (1)(2)(3)
    1Up to 800ccUS$4800
    2Up to 801-1000ccUS$6000
    3From 1001 – 1300ccUS$13200
    4From 1301 – 1500ccUS$18590
    5From 1501 – 1600ccUS$22550
    6From 1601 – 1800cc (Excluding Jeeps)US$27940

    It is relevant to mention that the Federal Government has fixed the leviable duty and taxes of automotive vehicles of Asian makes meant for transport of persons as discussed above irrespective of their physical condition. The Customs officers do not have any discretionary power to increase / decrease the leviable duties / taxes, the FBR said.

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  • Car import surges by 194 percent in five months

    Car import surges by 194 percent in five months

    ISLAMABAD: The Import of motor cars in Completely Built Unit (CBU) has surged by 194 percent during the first five months (July – November) of the current fiscal year owing to ease in travel restrictions that were imposed due to the coronavirus pandemic.

    According to the Pakistan Bureau of Statistics (PBS), the import of cars increased to $77 million during the first five months of the current fiscal year as compared with $26.13 million in the same period of the last fiscal year.

    As per import policy of Pakistan every person can bring a new motor car by paying prevailing rate of duty and taxes. However, the commercial import of motor cars is not allowed.

    The import of used cars are allowed under various schemes to facilitate Pakistanis living abroad. The overseas Pakistanis can bring motor cars under personal baggage, transfer of resident or gift schemes.

    New vehicles can be imported into Pakistan freely by any one against payment of duty & taxes under generally applicable import procedures and requirements.

    Officials in Pakistan Customs said that Pakistani nationals residing abroad including dual nationals can import old and used vehicles into Pakistan under the following 03 schemes: Personal Baggage; Gift Scheme; Transfer of Residence.

    Cars not older than 03 years and other vehicles not older than 05 years can be imported under these schemes.

    The structure of duty and taxes under these 03 schemes remains the same. Motorcycles and Scooters can only be imported under Transfer of Residence Scheme.

    Students receiving remittance from Pakistan, non-earning members of the Pakistani nationals living abroad and those who have imported, gifted or received a vehicle in the past two years are not eligible.

    The customs authorities said that all vehicles in new/used condition to be imported under transfer of residence, personal baggage or under gift scheme, the duty and taxes shall be paid out of foreign exchange arranged by Pakistan nationals themselves or local recipient supported by bank enchashment certificate showing conversion of foreign remittance to local currency, as under:

    a. the remittance for payment of duty and taxes shall originate from the account of Pakistani national sending the vehicle from abroad; and

    b. the remittance shall either be received in account of Pakistani national sending the vehicle from abroad or, in case, his account is non-existent or inoperative, in the account of his family.

  • Car sales jump up by 19 percent in July – November

    Car sales jump up by 19 percent in July – November

    KARACHI: The car sales of locally manufactured vehicles have increased by 19 percent during first five months (July – November) of current fiscal year owing to lower interest rates and higher demand.

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  • Car import climbs up by 185 percent in July – October

    Car import climbs up by 185 percent in July – October

    ISLAMABAD: The import of motor cars has climbed up by 185 percent during first four months (July – October) of current fiscal year 2020/2021 after ease in coronavirus lockdown.

    The import of Completely Built Units (CBU) motor cars increased to $58 million during July – October of the current fiscal year as compared with $20.24 million in the same period of the last fiscal year, Pakistan Bureau of Statistics (PBS) said on Wednesday.

    Industry experts said that as coronavirus lockdown eased in Pakistan as well as in other countries, the overseas Pakistanis cleared the motor vehicles under various schemes granted by the government.

    The commercial import of motor cars is not allowed in Pakistan. However, Pakistanis are allowed to bring motor vehicles under schemes including transfer of residence, gift scheme and personal baggage.

    In the past these scheme were grossly misused and the government while taking strict action imposed restriction that clearance of motor vehicles would only be allowed on payment of duty and taxes out of those amount which was remitted into Pakistan with evidence of banking channels.

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  • Motor vehicle tax rates for Tax Year 2021

    Motor vehicle tax rates for Tax Year 2021

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax on motor vehicles used for passenger and goods transportation. The income tax rate shall apply during tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (Updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

    The FBR updated rate of income tax on motor vehicles under Section 234 of Income Tax Ordinance, 2001:

    Rates of collection of tax under section 234,—

    (1) In case of goods transport vehicles, tax of two rupees and fifty paisa per kilogram of the laden weight shall be charged.

    (1A) In the case of goods transport vehicles with laden weight of 8120 kilograms or more, advance tax after a period of ten years from the date of first registration of vehicle in Pakistan shall be collected at the rate of twelve hundred rupees per annum;

    (2) In the case of passenger transport vehicles plying for hire with registered seating capacity of—

    S.No.CapacityRs per seat per annum
    (i)Four or more persons but less than ten persons.50
    (ii)Ten or more persons but less than twenty persons.100
    (iii)Twenty persons or more.300

    (3) In case of other private motor vehicles shall be as set out in the following Table, namely:-

    S. No.Engine capacityTax
    (1)(2)(3)
    1.upto 1000ccRs. 800
    2.1001cc to 1199ccRs. 1,500
    3.1200cc to 1299ccRs. 1,750
    4.1300cc to 1499ccRs. 2,500
    5.1500cc to 1599ccRs. 3,750
    6.1600cc to 1999ccRs. 4,500
    7.2000cc & aboveRs. 10,000

    (4) where the motor vehicle tax is collected in lump sum,

    S. No.Engine capacityTax
    (1)(2)(3)
    1.upto 1000ccRs. 10,000
    2.1001cc to 1199ccRs. 18,000
    3.1200cc to 1299ccRs. 20,000
    4.1300cc to 1499ccRs. 30,000
    5.1500cc to 1599ccRs. 45,000
    6.1600cc to 1999ccRs. 60,000
    7.2000cc & aboveRs. 120,000

    Following is Section 234 of Income Tax ordinance, 2001

    Tax on motor vehicles— (1) Any person at the time of collecting motor vehicle tax shall also collect advance tax at the rates specified in Division III of Part IV of the First Schedule.

    (2) If the motor vehicle tax is collected in instalments or lump sum the advance tax may also be collected in instalments or lump sum in like manner.

    (2A) In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years.

    (3) In respect of a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax shall not be collected after a period of ten years from the first day of July of the year of make of the vehicle.

    (4) In respect of a goods transport vehicle with registered laden weight of less than 8120 kilograms, advance tax shall not be collected after a period of ten years from the date of first registration of vehicle in Pakistan.

    (5) Advance tax collected under this section shall be adjustable.

    (6) For the purpose of sub-sections (1) and (2) “motor vehicle” shall include the vehicles specified in sub-section (7) of section 231B.