ISLAMABAD – Getting a new car turned into a hard-earned luxury amid a huge surge in prices that left many buyers reeling.
Major reasons behind uncontrolled car prices are massive depreciation of the local currency, and hefty taxes amidst record inflation that almost crushed the idea for a common man to get a new car or upgrade the existing ride.
Various sectors have different expectations from the budget, and people linked with the auto business are eyeing some relief but media reports suggest otherwise.
It has been learnt that the incumbent government, which is negotiating with the global lender to get bailout funds, is mulling to impose a Withholding Tax on locally produced cars on the basis of invoice price rather than engine capacity.
Amid contrasting reports, Pakistan Automotive Manufacturers Association reportedly approached the country’s top tax collection authority and warned that such moves will impact sales and that’s at a time when the auto industry faced back-to-back blows.
PAMA apprised FBR that the imposition of the Withholding Tax will further dent the sales of locally-made four-wheelers. It called on authorities to reconsider the proposal as it will directly raise their retail prices. Officials also urged the government to slash the current engine-based WHT on cars.
The authorities were told the country’s auto industry saw a revival after the Covid pandemic but the import restrictions badly dented the industry as top manufacturers halted production for months which caused losses worth billions.
The auto industry of South Asian nation is mostly dependent on imports and remained under severe stress amid the shocking depreciation of the local currency, and imposed curbs on the LCs. Besides auto, several other Industries are bearing the brunt in operations amid a huge slump in foreign exchange reserves held by the country’s central bank.
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