ISLAMABAD (January 15 2009): The Federal Board of Revenue (FBR) has reduced depreciation from two to one percent on import of old and used vehicles by overseas Pakistanis. The FBR has amended SRO.577 (I)/2005 through a notification issued here on Wednesday.
As a result, the decision to make 50 percent reduction in depreciation rate would increase overall rates of duties and taxes on the import of old and used vehicles.
It would increase prices of used cars and other vehicles, being imported by the overseas Pakistanis under Gift Scheme, Transfer of Residence Scheme and Personal Baggage Scheme. Under the amended notification, depreciation in the duties and taxes at the rate of one percent per month in payable amount, as per cumulative scales, will be allowed subject to a maximum of 50 percent as per Customs General Order No 14 of 2005.
Depreciation in the assessable value for the purpose of assessment of duties and taxes, will be allowed on the import of used/second-hand vehicles at the rate of one percent per month for each completed month, calculated from the date of first registration abroad up to the date of entry into Pakistan. Other old and used vehicles will be assessed as per normal procedure prescribed under the relevant Customs General Order.
This notification has been issued to implement the decision of the Economic Co-ordination Committee (ECC) of the Cabinet to benefit the auto industry. The ECC had considered a summery of the Ministry of Industries and Production on “measures to address declining trend in automobile industry” granted exemption from 35 percent cash margin on letter of credit (LC) on the remaining non-localised components for the auto manufacturers, assemblers and raw materials for the vender industry as done in other segments of industrial sector.
The ECC allowed reduction to one percent depreciation allowance from existing two percent per month on the import of used cars. The ECC also constituted a committee, comprising the Ministry of Industries, Ministry of Finance and the FBR, to examine other recommendations forwarded by the auto joints for possible approval to benefit the industry.