Pakistan imposes 30%, India 17% tax on cars: EDB

• Taxes play major role in determining cars' price, EDB officials say.
• New cars have airbags installed in them, they say.
• Cars' demand increased following reduction in taxes, they add.

Engineering Development Board (EDB) officials said Monday Pakistan has imposed 30% of tax on cars, while India charges 17% of tax on cars as they drew attention to the fact that taxes play a major role in determining the prices of cars.

The rates of cars have gone down due to the revision in taxes by the government, discussed the Senate Standing Committee on Industries and Production, whose meeting was chaired by Senator Faisal Sabzwari.

"New cars have airbags installed in them; we have told companies they have to [make cars] in line with the international agreements that Pakistan has signed," the officials said.

The demand for cars has increased following a reduction in taxes, the officials added.

Secretary Ministry of Industries and Production, speaking to the committee, noted India not only manufactured car parts but it produced raw materials.

"The rate of cars did not increase by the pace they should have," the secretary added.

A day earlier, Prime Minister Imran Khan, responding to a question as he took live calls from Pakistanis, said taxes on cars had been reduced in the FY2021-22 budget, and that he would look into why the rates hadn't decreased so far.

"We had reduced tax on 1,000cc cars so they can be bought at a lower price as common citizens use them, but if the rates haven't been reduced, I will check them," the prime minister said.

The premier forwarded a question related to "own money" — a premium paid to dealers to get the car sooner — to Federal Minister for Energy Hammad Azhar, to which he said: "Mr Prime Minister, we have notified the reduced prices to the dealers, but the person has asked about own money, which is a black market menace, as the demand is greater than the supply."

Azhar said car manufacturers were speeding up production to meet the growing demand, with Toyota and Honda motorcycles reaching high levels. New entrants such as KIA, Hyundai, MG, and Photon, will also help to catch up with the demand, he said.

"I believe the gap between supply and demand will end as supply will catch up. It is a good thing that the demand for cars is increasing as it shows that there is economic prosperity," he said, adding that the authorities would crack down on the black market.