FBR Introduces Various Measures to Minimize Car Rates

On Friday, The FBR (Federal Board of Revenue) has released the details of the stimulus packages & allowances given to the automobile industry through the Finance Act 2021-22.

Under the FBR’s budget guidelines published to the Investors of Customs here today, to bring down rates of compact cars & to support lower-middle socio-financial group upgrade from the motorcycle to their first family car, the following measures have been adopted:

1. The earlier divergence of cars “up to 800cc” & “exceeding 800cc” has been substituted with “up to 850cc” & “exceeding 850cc” in separate places in tariff.
2. Customs Duty on import of non-localized Completely Knocked Down (CKD) sets of vehicles up to 850cc has been decreased from 30% to 15%.
3. 7% additional customs duty (ACD) on CKD sets & seven 5 ACD & 15% Regulatory Duty (RD) on Completely Built-Up (CBU) cars up to 850cc have been discharged for 2 years.
4. Customs Duty on electric vehicles (EVs) in CBU form cut down to 10% from 25% for commercial dealers whereas there is a decrease of five % from 12.5 percent has been done for the imports by the local companies of EVs under SRO 656(I)/2006 for 1 year.
5. Customs Duty on import of non-localized CKD kits for inflexible lorries above five tons GVW falling under HS Code 8704 decreased from the current 10 % to 5 %.
6. Customs Duty lowered to 4 % on the parts for Hybrid Electric Vehicles (HEVs) & 3 % for Plug-in Hybrid Electric Vehicles (PHEVs) by the addition of new Part V(B) of Fifth Schedule.
7. Customs Duty on sub-assemblies of vehicles of PCT leading 87.11 (except for motorcycle rickshaw of PCT heading 8711.3020) decreased from existing 20 % to 12.5 %.
8. For motorcycles rickshaw of PCT moving 8711.3020 Customs Duty on localized CKD tools is 30% for new manufacture or new model exceeding 200cc as certified by EDB for two years
9. The concessionary Customs Duty for various models of new entrants under ADP 2016-21 to continue for five years from the date of the first manufacturing certificate of respective variant issued by EDB or up to 30th June 2026, whichever arrives earlier.
10. The importer-cum-assembler or Original Equipment Manufacturer (OEM) shall pay KIBOR plus 3 percent per annum to the customer against late delivery exceeding 60 days of initial booking on the whole of the deposited amount. Statement/details of reimbursement @ KIBOR + 3% against deliveries beyond 60 days shall be submitted to EDB or IOCO bi-annually. Furthermore, the importer-cum-assembler or OEM shall comply with shortlisted WP-29 Regulations as determined by EDB; whereas EDB or IOCO shall ensure the compliance.