After the increase in the GST, every Rs100,000 worth of car value would add Rs1,000 in terms of the GST, in the vehicle price.
A notification in this regard has been issued by automobile manufacturers. They said that their businesses are already suffering due to recent increase in prices of automobiles and now after the addition of the GST, their business would be ruined.
The federal government in the annual budget 2010-11 has increased the GST from 16 per cent to 17 per cent. The stakeholders of the automobile industry said the price increase would play havoc with their businesses.
They said that consumers would directly suffer from the increase of one per cent in the GST. “Neither the automobile producer nor the dealer would pay the GST. It is the consumer to whom the additional cost would be passed on,” said Jail Road Traders Association, General Secretary, Chaudhry Muhammad Iqbal.
“Our businesses have already been suffering due to the tightened lease policy by banks and increase in automobile prices,” he said, adding when new vehicles get expensive, demand for used cars rise, leading to a chain reaction of a hike in prices of used cars, consequently, decreasing the sale and purchase of used cars.
An automobile dealer, Rizwan Goraya, said that the sale and purchase of used automobiles have dropped drastically due to high prices. He said people are reluctant to sell used vehicles, as new ones are very expensive.
“Consumer credit for automobiles by banks has already decreased, businesses are ruined and people don’t have money to buy new vehicles, therefore the business of used vehicles have declined,” he said. Companies have issued notices of the hike in prices, he added.
Published in The Express Tribune, July 7th, 2010.
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