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Pakistan is certainly seeing a fair share of auto development. The vehicle industry is advancing so fast, we can barely keep up. There was a time when vehicle production was quite limited in the country. Now, with the new auto policy around the corner, many details have been revealed. People would be glad to know that there are many things speaking in their favour. The auto policy applies to every vehicle coming into the country or being locally assembled.

However, there is an added bonus for some specific sets of vehicles. Firstly, there are a lot of good things in store for vehicles with displacements less than or equal to 1000cc. Secondly, there is even more good news for people who wish to purchase electric vehicles. Despite the pandemic raging throughout the world, Pakistan has managed to thrive and release a robust auto policy. Let us dive into the details of it!

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Auto Policy And Tax Reductions

Firstly, let us take a look at the compacts which are being affected. At first, the policy only stretched to vehicles equal to and below 800cc. Now, with more development, the policy stretches even further. Vehicles of 1000cc and below are now under the radar of the auto policy. According to the figures,

  • Additional Customs Duty (ACD) has been brought down from 7 percent to 2 percent.
  • FED has also been reduced by 2.5 percent, leaving a lot of room for growth.

Going further into the FED details,

  • For 660cc to 1000cc ranges, FED has gone from 2.5 percent to absolute zero!
  • For 1001cc onwards till 2000cc, the FED has gone from 5 percent to 2.5 percent.

That is not all. The FED reduction applies to 2001cc to 3500cc vehicles too. Here, the reduction is from 7.5 percent to 5 percent. This shows that a lot of work ahs been done to make sure cars become more affordable. The engine capacity ranges shows that majority of the cars come under this bracket. This includes sedans, compacts as well as SUVs.

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Additional Details On Auto Policy:

Talking specific to the first range (660cc to 1000cc), there is quite a lot to tell here alone. Firstly, the GST has gone down from 17 percent to 12.5 percent. However, this is only applicable on 1000cc and below cars locally assembled in Pakistan. Secondly, the VAT on CKD vehicles has been completely abolished. This also applies to 1000cc vehicles.

Thirdly, as discussed above, the FED has been removed. It has gone from 2.5 percent to 0 in the blink of an eye! While this is a plate-full of good news, it is not all that we have for you. The auto policy contains details of a robust EV segment too.

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EV Details:

In an attempt to make sure the public embraces clean technology, EVs are seeing good news too. The GST has been reduced from 17 percent to 1 percent on locally assembled EVs. This could mean the new MG HS EV, which is being locally assembled in the country. Additionally, only 1 percent will be incurred on the import of EV parts. Apart from this, registration fee and tax on 2-3 wheeled EVs has also been abolished.

There is nothing but good news for vehicle buyers in this entire article. The people want to be able to afford vehicles and the auto policy has certainly made it easier to do so. The KPK government has announced the registration of vehicles up to 2500cc, down to Rs.1. This all seems a bit too good to be true.

Yet, it is a major turning point for Pakistan and its automotive industry.

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