Economic Co-ordination Committee (ECC) of the Cabinet has approved reduction in the age limit of used cars to three years from five years. The ECC also decided that the implementation of the decision will be effective from December 15, 2012. The FBR has worked out total revenue loss of Rs 13.7 billion in January-June 2013. During this period, the loss of customs duty on account of reduction in the age limit of old vehicles is Rs 8.2 billion.
Therefore, the revenue loss of sales tax and income tax comes to around Rs 5.5 billion during January-June 2013. The FBR has worked out the revenue loss on the basis of trend of import of old and used vehicles during the past years. The age limit, number of cars and actual amount of duties and taxes collected from old vehicles during past fiscal years has been taken into account for determining the revenue loss.
The FBR''s latest data further revealed that Board has collected duties and taxes of Rs 4.1 billion on the import of used cars during 2010-11 when the age limit of old vehicles was up to three years. In 2011-12, the age limit of old and used cars was increased from three to five years in February 2011. The FBR has collected around Rs 17 billion during 2011-12 on the import of old vehicles. The increase in the age limit from 3 to five years in 2011-12 has shown increase of 400 times more revenue as compared to the corresponding period of last fiscal year.