NBR to raise tax benefit ceiling on hybrid car import to 2500cc

The National Board of Revenue (NBR) has decided to raise the tax benefit ceiling on import of hybrid cars to 2500cc from the existing 1800cc.

The NBR will issue a Statutory Regulatory Order (SRO) shortly on it following the law ministry vetting of a proposal to that end, according to sources.

The board has taken the move following a recent directive of Finance Minister AMA Muhith in this connection.

Under the facility the importers will get waiver of the 250 per cent Supplementary Duty (SD) on import of 2500 CC hybrid cars.

In the budget for the current fiscal year (FY) 2013-14, the NBR kept the hybrid cars up to 1800 cc outside the purview of the SD.

Earlier in the FY 2012-13 also the hybrid cars up to 2500cc enjoyed waiver of the SD.

Sources concerned said the facility would be re-introduced for vehicles up to 2500cc following the directive of the Finance Minister.

The proposal would be sent to the law ministry for vetting soon, they said.

However, the customs officials are not in favour of providing such a tax benefit on import of cars, as they found that the facility would benefit only the well-off section of people.

Sources concerned said nearly 300 hybrid cars were imported in the last four years under the tax-benefit.

The customs department earlier proposed withdrawal of the tax benefit on such hybrid cars considering them as luxury items, they said. Responding to the proposal, the finance minister hinted at considering the issue in the budget for the next FY 2014-15.  

Customs officials were of the opinion that such tax a benefit was needed for industrialisation, not for import of luxury items.  

There was no need to support the import of hybrid cars, they added.

However, 25 per cent import duty, 5.0 per cent regulatory duty, 15 per cent Valued Added Tax (VAT), 5.0 per cent advance income tax (AIT) and 3.0 per cent Advance Trade VAT (ATV) will be imposed on import of such cars having the capacity up to 2,500 cc.

The government offered the tax-benefit for such hybrid cars to encourage use of environment-friendly and fuel-efficient vehicles.