The price of reconditioned vehicles would be cheaper, or costlier, depending on the age of the vehicle with the government going back to the year-based depreciation system.Finance Minister AMA Muhith made the proposal while presenting the budget for the 2013-14 fiscal year in parliament Thursday.
Presently,a five-year-old car can be imported as a reconditioned vehicle. On such vehicles a total of 25 percent depreciation, that is, with 10 percent dealers’ commission a consolidated amount of 35 percent depreciation is allowed.
Muhith said that this consolidated depreciation is not just because under the system the tax incidence of an older car becomes higher than a newer car.
So he proposed the year-based system instead of the consolidated depreciation system.
As per the proposal, reconditioned cars less than one-year-old will enjoy zero percent depreciation, above one year but less than two year old vehicles will get depreciated at 30 percent.
The old vehicles which will be above two years but less than three years will get 35 percent depreciation, while above three years but less than four years old vehicles will enjoy 40 percent depreciation.
The four to five years old vehicles will get depreciated at 45 percent.
Muhith noted that in order to discourage the use of private vehicles along with increasing government revenue, the duty and taxes on motor vehicles were restructured during the 2009-10 and 2010-11 fiscals.
“No significant change was made in this sector in the 2011-12 and 2012-13 financial years,” he said.
He did not propose any change in the existing duty and tax structure on vehicles in the next year.
It is to be mentioned that under this proposed system importers will not be separately entitled to dealers’ commission.
“The value of old cars on which depreciation will be allowed would not be more than that of new cars,” the Minister said.
Muhith said that windshield glass is essential for vehicles. Many such glasses are broken/ destroy for different reasons particularly at the time of political unrest. This product is not yet locally produced. It is now chargeable to 12 percent import duty. For these reasons its duty is proposed to be reduced from 12 percent to 5 percent.
Presently, he said, CBU Minibus is chargeable to 12 percent customs duty (CD). On the other hand, Minibus chassis is subject to 25 percent CD. This anomalous duty structure hampers the growth of domestic Bus building industry.
In order to address this disparity, I propose to reduce the 25 percent CD on Minibus Chassis to 10 percent. (Source: UNB)
