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Today, the federal government will unveil the highly anticipated fiscal budget 2024-25. Finance Minister Muhammad Aurangzeb is scheduled to deliver a speech in the National Assembly at 4 pm, outlining the key financial policies and measures. In this article, we will delve into the expected implications of the budget on the auto sector and petroleum goods, particularly the potential changes in taxes and duties.
Expected Tax on Petroleum Goods
According to media reports and economic experts, the government is planning to increase the petroleum levy on petrol and diesel under the upcoming loan agreement with the International Monetary Fund (IMF). As per sources, the government will increase the per liter levy on petrol and diesel to Rs. 90/liter from the current Rs.60/liter. It is pertinent to mention that the Rs. 60/liter levy was imposed on demand of the IMF, but now it seems that the threshold has been further stretched. If it’s true, it is not good news for the ordinary people of Pakistan because it will shoot up the rates of fuel in the country, leading to another inflation wave.
According to media reports, the government may also impose an 18% GST on petroleum goods, which currently stands at 0%. In both cases, the situation doesn’t seem very hopeful for Pakistan’s commoners.
Expected Taxes on Imported Used Cars
There are multiple reports suggesting that the government is planning to impose new taxes and duties on imported used cars. The experts speculate that the government might remove the benefit for imported used hybrid cars and reintroduce the Regulatory Duty (RD) on them. This move is expected as local car companies have begun producing these vehicles in the country, potentially leading to a change in the dynamics of the used car market.
Meanwhile, the previous government removed RD in April 2023. After the revision, there was no RD on used cars up to 1800cc, while there was 70% on used cars above 1800cc. This means there is 0% RD on used cars up to 1800cc but 70% on used cars above 1800cc.
Earlier this month, the Overseas Investors Chamber of Commerce and Industry (OICCI) also demanded the imposition of regulatory and additional duties on car imports. After a series of moans and groans at what the government is doing regarding the import of used cars, as per media reports, increased RD on car imports is anticipated in the federal budget 2024-25.
Reports have informed that regulatory duty on engines over 1800 cc may jump by 30%, from the previous 70% to the new 100%. Similarly, there is also a proposal to impose a 15% duty on used cars up to 1800 cc.
But all of these are speculations and reports for the time being. The situation will become clear after the finance minister’s budget speech. Until then, keep your fingers crossed, seatbelts tightened, and stay tuned to PakWheels Blog.
