The motor industry yesterday claimed that price reduction of spare parts was unlikely, despite Prime Minister and Finance Minister Mahinda Rajapaksa signalling it during the 2021 Budget presentation on Tuesday.
“I propose to reduce the import taxes levied on vehicle spare parts required for new production sectors to incentivise entrepreneurs in automobile industries engaged in vehicle repairing and vehicle assembly,” said Rajapaksa.
The 2021 Budget proposed a reduction of import duty to 15% from 30% on motor spare parts.
However, motor traders said despite the reduction, there is an increase in CESS and the method in calculating the VAT on imports.
“Under the new scheme, we need to pay 53.62% on CIF value to Government as taxes/charges. Before the proposed duty reduction, we paid 52% on CIF value to Government. In effect, our cost has gone up by 1.6%,” said traders, indicating price reduction of motor spare parts was unlikely.