CEO IMC urges to remove ACD
Aftab Ahmed
The Chief Executive Officer of Indus Motors Limited Ali Asghar Jamali has urged the government to remove additional custom duty (ACD) on the import of spare parts in the upcoming budget.
He has also demanded to give the same incentives for manufacturing of the hybrid cars in the new policy which the government had announced for Electric vehicles in the new EV Policy to promote investment.
The Chief Executive Officer of Indus Motors Limited Ali Asghar Jamali informed the journalists here on Friday.
He also asked the government to give incentives to the vendors to manufacture spare parts locally. He has further urged the government to adopt a wholesale-retail mechanism for sales of vehicles which is practiced globally and can help counter on-money and delayed delivery of vehicles.
While appreciating Govt measures of curbing the premium menace through implementing transfer tax, the issue can further be managed by addressing the sales mechanism.
He said the current system under which new cars are being sold in Pakistan has become unviable for the dealers who on a transaction of around Rs4 million (retail price of 1800 cc car) have to pay Rs294945 as government levies whiles their net commission is only Rs56760.
Elaborating on his point he said that the dealer acts as a commission agent under the present system. The customer places an order through the dealer and makes the required advance payment. The dealer dispatches the payment and order to IMC or OEM that generates an invoice in the customers’ name and dispatches the car to the dealer that delivers the car to the buyer.
He said on a car worth Rs. 3999000 the customer/dealer pay WHT under 213 B worth Rs. 75000. The IMC or OEM pays the dealer commission of Rs. 64000 that after deducting WHT of 12 percent comes to Rs. 56760. The dealer has to pay a 1.5 percent minimum turnover tax also, which is almost 8 times the WHT on commission income.
Moreover, he added the withholding tax applicable on purchase by the dealer and later on sales to the customer at a rate of 4 per cent is too high comes to Rs159960. It is double taxation as well.
He proposed that instead of terming the dealer as a commission agent it should be treated as a retailer and the manufacturer as a wholesaler. This way, the industry will avoid double taxation.
He urged the government to reduce the minimum turnover tax from 1.5 percent to 0.25 percent in line with the tax applicable to motorcycle distributors, fast-moving consumer goods, pharmaceutical, and petroleum products.
Moreover, the government should exempt withholding tax paid by the distributor at the time of purchase of cars from the manufacturers. Additionally, he also called for eliminating the WHT of 4 percent under 153 to avoid double taxation.
