New Tax to be Imposed on Car Sales to Eliminate “Own Money” from Pakistan

The federal government has decided to impose an additional withholding tax (WHT) on locally-assembled cars, effectively increasing their prices up to Rs. 200,000 per unit, reported Business Recorder.

This measure has been taken as a deterrent to ‘own money’, claims the Ministry of Industries and Production (MoIP). The ministry has taken note of the frequent complaints about delayed delivery of vehicles by manufacturers. This system of unnecessary delays results in the buyers of cars paying additional payments known as ‘Own Money’.

To discourage this practice, MoIP has proposed this WHT on people who buy locally manufactured cars from original equipment manufacturers (OEMs) and sell them within 90 days of delivery. The newspaper reported that the ministry is also proposing an additional WHT of Rs. 50,000 on the engine capacity up to 1000 cc, Rs. 100,000 on up to 2000 cc and Rs. 200,000 on above 2000 cc.


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This issue of ‘Own Money’ exploitation was raised in a cabinet meeting, where the attendees of the meeting, including the Prime Minister, were of the view that the import car policy must be reviewed to look into the protection that has allowed the local assemblers to exploit consumers.

Federal Minister for Industries and Production Hammad Azhar pointed out that the automobile industry had been facing difficulties due to the COVID-19 situation, and that had led to this practice of ‘on money’ exploitation again. He said that the situation would likely return to normal considering that manufacturers were ramping up production.

This WHT policy, however, will not apply to electrical vehicles (EVs) for the time being, and individuals interested in EVs may be facilitated through a policy intervention that could not be covered in the approved Electrical Vehicles policy (2-3 Wheelers and HCVs) by the Economic Coordination Committee (ECC) on June 10, 2020.

The waiver of Additional Custom Duty (ACD) and Value Added Tax (VAT) on imports for EVs in completely build units (CBU) condition, is proposed till June 30, 2025.


MoIP Changes Focus of EV Policy from Cars to Two-Wheelers & Three-Wheelers

MoIP has proposed that different fiscal and financial incentives may be offered to promote the import, usage, and manufacturing of EVs and related infrastructure in the country. The inter-ministerial committee constituted by the Federal Cabinet has now finalized the proposals concerning EV Policy (four-wheelers). The proposed fiscal incentives will remain in force till June 30, 2026, the newspaper reported.

    • How many genuine cases are there that sell their cars within 90 days? Don’t you agree most of them are investors who stock up the cars and then sell it on a profit that we call “own” money?

      • Yeah Only SUZUKI involve for 90 DAYS Delivery.
        Ye OEM Wale Khud Allow Nahi karte, Online SeLLING KA,
        Annual Lac Unit Kehte hai Banane ka Uani 270 car makes on daily basis.
        Conusmer ko majboor karte hia franchise se lo ja kar

  • I think they should impose Rs500,000 on the sale of car within 6 months instead of 3 months. Three months are very less for the re-seller of the cars. This will bound the re-sellers for at least 6 months.

  • bad Idea, own money will increase by 2 lakh now, the only way to solve this issue is produce more cars so that end user can buy cars directly from OEMs, they need to understand that people go to middle man only when they have no chance to get the car directly from company, its simple logic idiots.

  • The waiver of Additional Custom Duty (ACD) and Value Added Tax (VAT) on imports for EVs in completely build units (CBU) condition, is proposed till June 30, 2025.

  • The idea is sound in theory but not in execution. There’s very little detail in the article about how this would be enforced. I believe there are already restrictions on number of vehicles to each CNIC. Wouldn’t it be better to implement a better data sanity process whereby you are verifying the car order versus delivery date from the customer (based on manufacturer schedules and production capacity) and working backwards to implement penalties (instead of calling it a tax which it really isn’t) on the perpetrator: manufacturer if they cannot meet the minimum production capacity but primarily dealer if they charged own or failed to punctually handover the car to the customer after receiving it on time from the manufacturer.

    From reading this article it is so scant in the process details that is just seems to come across as another way for government cronies to twist a well-intentioned idea into a money making scheme by robbing the robbers.

    I guess time will tell.

  • govt just wants to raise taxes. nothing to do with “on” or “own” money. if they place additional taxes on transferring vehicles, then people will just stop transferring vehicles. simple

  • what if the genuine owner need money with in 3 months after car buy , they also cannot sale the car just because of the tax damage , WTF

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