Auto Industry Becomes Attractive Again as Non-Filers are Allowed to Buy New Cars

Stocks in the automobile sector gleamed at the Pakistan Stock Exchange on Tuesday because of the revised finance bill lifting the ban on purchase of new cars by non-filers of tax returns. Stocks of major auto industry players saw a 5% increase in value.

Related: Government Presents Amendments to Budget for Ongoing Fiscal Year

In order to increase the tax net, previous government in the Federal Budget 2018-19, had barred non-filers from buying new motor vehicles if their names aren’t featured in the active taxpayers’ list (ATL) of the Federal Board of Revenue (FBR).

Although this came into effect from the 1st of July 2018, auto manufacturers had stopped the booking of cars by non-filers in May 2018, as the companies usually take at least three months to deliver a vehicle. Since then the sales kept on dropping month after month.

Related: Local Auto Assemblers Stop Selling Cars to Non Filers

As per the data released by the Pakistan Automotive Manufacturers Association (PAMA), 21,813 units were sold in May, recording a 15% fall compared to the previous month. While it further dropped another 15% to 18,518 units in June.

Finance Minister Asad Umar presenting amendments to the Finance Bill 2018-19

This was for the first time since fiscal year 2015, that auto industry reported a decline in sales in the first two months of FY2019. This is due to the fact that more than 60% of car buyers in Pakistan are non-filers. This move dented the industry which is currently being joined by new investors courtesy Auto Policy 2016-21. The downfall in sales was a major concern for existing as well as new automakers emerging in the scenario.


It also remains a fact that non-filers, while buying a new automobile, pay more than that of filers. Assume a non-filer buying a 1000cc vehicle will pay PKR 10,000 more to the national treasury compared to a tax filer. So barring non-filers from purchasing new cars not only resulted in the dent in sales of automobiles, it also let the government suffered a loss of huge sum of money.

Car dealers and automakers have lauded the current government’s step to allow non-filers to buy new cars, as it’s a huge relief for both automakers and consumers alike. And since each person is paying indirect tax on every commodity which is going directly to government exchequer, barring non-filers from purchasing new cars was never going to be fruitful.

What is your take on government’s measure to make non-filer eligible to buy new cars, let us know with your comments.

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