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It’s June ’24, and interestingly, budget 2024-25 is just hours away. There are several updates swirling around in the market regarding the tax and duties ready to impose on imported used cars in conjunction with electric and hybrid vehicles. Isn’t it Surprising, especially for EVs and hybrids? Well, you will get a detailed blog on it.

For now, we are here with a recap translating what previous budget 2023-24 brought for country’s local car industry.

Finance Bill 2023

Starting from Finance Bill 2023, budget 2023-24 raised the advanced income tax on vehicles with engine capacities exceeding 2000cc. These updated regulations encompassed both imported and domestically produced vehicles ranging from 2001cc to over 3000cc in engine capacity.

As per the bill, the following were the tax rates implemented for different vehicle engine capacities.

  • There was a 6% tax imposed on the value of vehicles with engine capacities from 2001cc to 2500cc.
  • Vehicles with engine capacities from 2501cc to 3000cc faced 8% tax based on their value.
  • Vehicles with engine capacities exceeding 3000cc are subjected to a 10% tax, again, based on their value.

35% Customs Duty Imposed on Car Parts

As per the details outlined in the 2023-24 budget document, a 35% customs duty rate was set for the import of car components. Surprisingly, this rate applied uniformly to all car parts, regardless of their complexity or importance in the overall functioning of the vehicle.

Reduced Customs Duty on CKD Buses And Trucks

In the fiscal budget for 2023-24, the government took a step to support the local manufacturing industry by reducing the Customs Duty (CD) on completely knocked down (CKD) buses and trucks from 10% to 5%.

Customs Duty on Tractors in Budget 2023-24

Last year, the government has also imposed a Customs Duty of 15% on the import of agricultural tractors. The CD for tractors was based on their engine power, and the details indicated that tractors with engine power between 26 kW and 75 kW were subjected to a 15% CD, while other agricultural tractors faced a CD of 10%.

1% Customs Duty on CBU HEVs

In budget 2023-24, the market expected a huge concession for HEV CBUs, but that didn’t happen. 1% Customs Duty (CD) was applied only on commercial vehicles, but there was another catch.

This concession would only be offered if the local companies plan to manufacture/assemble the vehicle locally. So, if the companies do not plan to assemble these vehicles locally, they have no concession.

Meanwhile, the 4% CD on the import of parts of HEV and 3% CD on Plug-in Hybrid Electric Vehicle (PHEV) were remained unchanged; there was no concession or exemption in this regard.

What do you expect from upcoming budget 2024-25 especially for local auto industry and its revival? Tell us in the comments section.