There is speculation that with the complete abolition of Regulatory Duty (RD) on used imported cars of up to 1,800cc, as well as the decrease in RD and Customs Duty on new imported cars, mobile phones, among others, their prices will soon come down. We will answer this question towards the end of this blog, so read till the end.
On April 1, 2023, two Statutory Regulatory Orders (SROs) that had raised the prices of imported cars and other goods in Pakistan through additional taxation expired. This could mean that these goods and products would now cost less, which is indeed a great news for many.
However, considering the current economic conditions in the country, it is possible that the government may impose additional duties and taxes on the same through new Statutory Regulatory Orders (SROs).
What May Become Cheaper Now
- New and old cars (RD on new cars will still be 15% along with other taxes)
- Premium mobile phones (50% reduction in RD)
- Meat
- Ice cream
- Vegetables
- Home appliances
- Footwear
- Furniture
- Musical instruments
- Fish
- Fruits
- Dog and cat food
Background
To curtail the outflow of US Dollars from Pakistan, narrow the Current Account Deficit (CAD) and bolster the local auto industry, the government of Pakistan in August 2022 issued two SROs increasing Regulatory Duty and Additional Customs Duty on more than 600 luxury and non-essential items. These two SROs were supposed to expire on February 21, 2023. Two additional SROs were issued, extending their deadlines until March 31, 2023. This deadline was never further extended which means that the increased RD and Additional Customs Duty now stand abolished.
Most Affected Cars
As a result of these two SROs, the following were the most affected:
Here is a list of some imported cars in Pakistan:
| Toyota | Honda | Suzuki | KIA | Hyundai | MG |
| Camry | Accord | Jimny | Carnival GLS | Staria | HS |
| Prius S | CR-V | APV | Carnival Executive | Santa Fe | HS PHEV |
| Rush G AT/MT | IONIQ | ZS | |||
| Corolla Cross | ZS EV |
What Did the Government Hope to Achieve Through These SROs?
As mentioned earlier, the government was trying to curtail the outflow of Dollars from Pakistan. However, in reality, it saved the government only $400 million. The fact that the State Bank of Pakistan (SBP) has stopped opening of Letters of Credit (LC) didn’t help at all. On the other hand, it severely affected the imported car industry by killing their demand, resulting in the closure of showrooms, increased layoffs, and a loss of revenue.
What Does It Mean for the Consumers: Will the Cars, Mobile Phones and Others Become Cheaper Now?
While the RD and Customs Duty have been reverted to their original rates, don’t forget the Rupee has lost its value by at least 32% since August 2022. So, if you think it will make a big impact on the current prices of these automobiles, mobile phones, etc. think again. Though there could be some decrease, the importers will have to pay more for these items now, so they will sell them accordingly in the local market.
Suggested further reading:
Regulatory Duty (RD) and Customs Duty on Imported Cars Increased
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