Tax breaks on hybrids retained

LAHORE: The cash-strapped government has retained the massive tax concessions on the manufacturing of hybrid electric vehicles (HEVs) despite concerns raised by the standard car manufacturing companies.

“After reading the Finance Bill 2023-24, we have reached a consensus that the PMLN-led coalition government has continued the PTI’s 2021 policy that gives 22pc tax concessions on manufacturing of HEVs — a Rs12 million car that can only be afforded by the rich and not the lower-middle or middle class,” a source in the auto industry told Dawn on Saturday.

He confirmed that the sales tax on 1,800cc and above HEVs was earlier 8.5pc and 12.75pc, respectively. Similarly, the customs duty on the import of some specific parts of HEVs was earlier 3pc and 4pc on two different technology HEVs — PHEV (Plug-in Hybrid Electric Vehicle) and HEV. “In the 2023-24 budget, there is no change in this, meaning that the 2021 policy has been extended for the next fiscal year as well.

According to another source in the industry, the government has added more parts to the list of localised parts under SRO 693 which essentially will increase the price of a standard car from Rs50,000 to Rs100,000. “The government has also rescinded fixed import duty on used cars above 1,300cc which means it would come on ad-valorem which is prone to under-invoicing. This move will encourage imports of used vehicles,” he maintained.

Published in Dawn, June 11th, 2023