Automobile makers ask govt not to increase tax and customs duty on vehicles in the new budget
ISLAMABAD: The automobile manufacturers have urged the federal government not to increase tax and customs duty on vehicles in the new budget for 2023-24.
Pakistan Automotive Manufacturers Association (PAMA) wrote a letter to the finance ministry and FBR and pointed out that the new taxes and duties being levied on automobiles in the new budget would further undermine the sales of the already tormented auto industry of the country.
Withholding tax, at present, is levied on the engine capacity basis of an automobile u/s 231B of income tax ordinance.
In the upcoming budget, the proposal under consideration is to charge the WHT on an invoice price basis instead of an engine capacity basis.
Therefore, PAMA said, “We are requesting the government not to go for this proposal as this would substantially increase the payment of the WHT amount, increase the sale price, and badly impact the sales. Even we request to reduce the current engine-based WHT amount,” the letter reads. Here is the current engine capacity-wise WHT amount for the filers and non-filers.
PAMA argued against the change of the age-old practice of levy of WHT on engine capacity basis to invoice price basis which would not only badly impact the sales but also against the simplicity and convenience of the levy of tax.
It is strongly recommended to maintain or to further reduce the existing withholding tax structure u/s 231B without changing the rates Mettis Global reported today.
The letter further stated, “Barring decline during the Covid-19 years of 2019-20 and 2020-21, the industry started to revive during 2021-22 and then again nosedived massively in 2022-23 on account of import restrictions throughout 2022-23.”
Now, due to such restrictions, skyrocketing inflation, and other macroeconomic maladies in the country the industry is suffering the worst times, our several members are in losses of billions of rupees.
It may, therefore be seen that any further increase in the amount of tax shall badly impact the industry which is already paying 40% plus per unit tax.
The current position of WHT is shown as under:
