Federal Tax Ombudsman (FTO) has proposed measures to the Federal Board of Revenue (FBR) to control the phenomenon of “own money” within the automobile sector in the upcoming budget (2022-23).
The dealers have been charging own money on different makes and models of locally manufactured cars. In this connection, the FBR has received a budget proposal from the FTO office for the next fiscal year.
The FTO said that the auto manufacturers through their dealers book new cars against partial payments and do not accept full amount pay orders/drafts initially. They do this practice to avail the benefit of time and price hikes.
The FTO has proposed to instruct dealers to receive full payment pay orders at the time of booking as it will save consumers from price hikes and will curtail own money on vehicles.
In a recent order issued by the FTO, Federal Tax Ombudsman (FTO) Dr Asif Mahmood Jah had directed the Federal Board of Revenue (FBR) to ensure payment of Kibor plus 3 percent per annum to customers of vehicles against delayed car deliveries exceeding 60 days.
According to the FTO’s directions to the FBR, a number of taxpayers had filed complaints with the FTO stating that they suffered a lot of mental and financial hardship on account of extra financial burden due to delayed delivery.
Dr Jah has not only directed the FBR to ensure compliance of clause (ii)(xivb) but has also ordained the FBR to forward detailed statements being submitted biannually to the Engineering Development Board (EDB) or Input/Output Co-Efficient Organisation (IOCO) reflecting details of compensation, being paid to customers, who receive delivery beyond 60 days, in light of the SRO 837 (1)/2021.
There have been consistent complaints of delayed deliveries by importers–cum-assemblers and non-abidance of the provisions of the SRO that envisages payment of Kibor plus 3 percent to the customers against delayed delivery, the FTO office added.
Last year, a Pakistan Institute of Development Economics (PIDE) research study revealed that in the last five years car consumers paid Rs. 150 to 170 billion in undocumented transactions as “own money”.
The own money is a premium charged over and above the price of vehicles by dealers in exchange for immediate delivery of cars due to shortages existing in the market.
Good move by the govt.
Why don’t they still not start taking action against the dealers? The only thing they need is making a call to every dealership as a customer and ask if car is available on “OWN” simple as that. It will not take much effort to create online form for customers got car deliveries after 60 days and not yet received the compensation as per law. PAK Suzuki is the biggest law offender so far.
Yes Govt. Needs to take strict actions against this Mafia which has increased car prices by upto 30% with a year on account of dollar, yet Dollar hasn’t increased by 30%.