The government is considering abolishing 7 percent Additional Customs Duty (ACD) on the auto sector in the next federal budget (2021-22), top government officials revealed to Propakistani on Monday.

High-level officials informed that the Ministry of Industries and Production and tax authorities of the Federal Board of Revenue (FBR) would jointly finalize the proposal on the withdrawal of the ACD on the import of spare parts used in the local assembling of vehicles.

In this connection, the Ministry of Industries and Production and the Federal Board of Revenue (FBR) will convene a meeting scheduled to be held at the Ministry of Industries and Production on March 31.

Presently, the auto sector is liable to pay 7 percent ACD on the import of spare parts. The ACD may be abolished under the incentives for the vendors to encourage the manufacturing of vehicle spare parts in the country.

FBR has already abolished additional customs duty on the import of electric vehicles 2-3 wheeler completely built unit (CBU) condition; electric auto rickshaw, electric motorcycle, and 3-wheeler electric-loader up to June 30, 2025.

Under the notification, the additional customs duty would not be applicable on the import till June 30, 2025, of electric vehicles 2-3 wheelers (CBU) falling under Pakistan Customs Tariff (PCT) codes 8703.8030 (electric auto rickshaw), 8711.6040 (electric motorcycle), and 8711.6060 (3-wheeler electric-loader).

FBR had issued a notification to amend S.R.O. 572(I)2020 on February 3, 2021. According to this notification, no more additional customs duty will be charged on imports of electric vehicles under the following Pakistan Customs Tariff (PCT) categories:

  • Electric Auto Rickshaw (8703.8030)
  • Electric Motorcycle (8711.6040)
  • 3-wheeler Electric-loader (8711.6060)

In addition to this, exemptions of ACD and Value-Added Tax (VAT) on imports of EV (2-3 wheelers) will allow Pakistan to transform its current 2-3 wheeler market with the introduction of new e-bikes and e-rickshaws in the country.

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