The government has unveiled the financial budget for the fiscal year 2019-20 earlier today. Minister of State for Revenue Hammad Azhar presented the Budget 2019-20 in the National Assembly.
As far as the automobile industry is concerned, the major impact is due to the changes in Federal Excise Duty (FED) structure. Previously in the Supplementary Bill 2019, the government had imposed 10% FED on locally assembled vehicles of 1700 cc engine displacement and above. Although the government has now reduced the FED for 1700cc & above vehicles, but it has broadened the duty to various other vehicle segments, details of which are given below.
|Category||FED (old)||FED (New)|
|Up to 1000cc||0%||2.5%|
|1000cc to 1700cc||0%||5%|
|1700cc to 2000cc||10%||5%|
|2000cc & above||10%||7.5%|
The new FED structure is going to have a negative impact on vehicles up to 1700cc engine capacity, which will make these cars more expensive. Bigger vehicles with 1700cc & above engines will see a decrease in price and will only fulfill a handful of buyers with strong purchase power.
The proposed FED if approved from the assembly will be implemented from the 1st of July 2019, which means cars under 1700cc will see an increase in sales in June as people will rush to avail the non-existent FED on these cars. Buyers of vehicles above 1700cc might want to hold their purchasing decision for a while and wait for July for the prices of these cars to come down.
To summarize, the Budget 2019-20 will again benefit the wealthier and may not be equally beneficent for masses who buy ordinary sedans and hatchbacks.