Automotive Industry Incentives: FBR Releases Details

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ISLAMABAD: The Federal Board of Revenue (FBR) on Friday released details of the incentives provided to the auto industry through the 2021 finance bill.

According to the FBR budget instructions passed to customs collectors here on Friday, in order to lower the prices of small cars and support lower middle income groups who switch from motorcycles to their first family car, the following steps have been taken. :

(i) The previous bifurcation of cars “up to 800 cc” and “over 800 cc” has been replaced by “up to 850 cc” and “over 850 cc” in their respective places in the tariff.

(ii) Tariffs on importation of unlocated CKD up to 850cc reduced from 30 percent to 15 percent and localized from 46 percent to 30 percent for new makes or models certified by the EDB for two years from the date of issuance of the certificate of manufacture or until June 30, 2024, whichever occurs first.

(iii) Seven percent additional customs duties (ACD) on CKD kits and seven percent DAA and 15 percent RD on CBU cars up to 850 cm3 exempt for two years.

(iv) Reduction of tariffs on electric vehicles in the CBU to 10 percent from 25 percent for commercial importers and to 5 percent from 12.5% ​​for imports by the local electric vehicle manufacturer under SRO 656 (I) / 2006 for one year.

(v) Unidentified CKD import tariffs for rigid trucks over five tonnes GVW falling under HS code 8704 have been reduced from 10 percent to five percent.

(vi) Tariffs are reduced to four percent on specific parts for hybrid electric vehicles and to three percent for plug-in hybrid electric vehicles by adding new Part V (B) of the Fifth Schedule.

(vii) Customs duty on sub-assemblies of vehicles of heading PCT 87.11 (except motorcycle rickshaws of heading PCT 8711.3020) reduced from 20 per cent to 12.5 per cent. These measures will also remove the anomaly as the non-localized MRC is at 15 percent.

(viii) For 4-stroke automatic rickshaw from PCT position 8703.2115 CD on CKD located at 30 percent for a new make or model exceeding 200 cc certified by EDB for two years from the date of issue of the certificate manufacturing or until June 30, 2024, whichever occurs first.

While non-localized CKDs attract CDs at 15 percent.

(ix) For vehicles of PCT 87.11 (except rickshaw motorcycles of PCT 8711.3020) CD on CKD located at 30 percent for a new make or model exceeding 125cc certified by EDB for two years from the date of issuance of the manufacturing certificate or more by June 30, 2024, whichever occurs first.

While non-localized CKDs attract CDs at 15 percent.

(x) For rickshaw motorcycles of PCT 8711.3020 CD on CKD located at 30 percent for a new make or model exceeding 200cc certified by EDB for two years from the date of issue of the certificate of manufacture or until June 30, 2024, according to earlier.

While non-localized CKDs attract CDs at 15%.

(xi) Not all components or sub-assemblies will be eligible for exemption under SRO 655 (I) / 2006 when the IORC, as determined by the EDB or IOCO, is less than 30% added value for the manufacture of specified or assembled components.

(xii) Agricultural tractors of PCT heading 87.01 CD located at 15% for new makes or models certified by EDB for two years from the date of issue of the certificate of manufacture or until June 30, 2024, depending on the first possibility.

(xiii) Concessional tariff for various new entrant models under ADP 2016-21 will continue for five years from the date of the respective variant’s first manufacturing certificate issued by the Engineering Development Board or until June 30, 2026, whichever occurs first.

(xiv) The importer-assembler or OEM will pay KIBOR plus three percent per annum to the customer for late delivery exceeding 60 days from the initial reservation on the full amount deposited.

The @ KIBOR + 3% refund statement / details for deliveries beyond 60 days must be submitted to EDB or IOCO twice a year.

In addition, the importer-assembler or OEM must comply with the Restricted List of WP-29 regulations as determined by EDB; while the EDB or IOCO will ensure compliance.

(xv) Appendix-I and Appendix-II of SRO 693 (I) 2006 will be updated twice a year no later than December 31 and June 30 of each year upon recommendation of the Technical Development Board. Components or assemblies located by any OEM or vendor in the respective vehicle category will be eligible for inclusion in Annex-I and Annex-II.

Copyright Business Recorder, 2021



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