The National Board of Revenue (NBR) reversed its decision to lower the tax rate on incomes from manufacturers of motorcycles, air conditioners, and refrigerators from 10 percent to 5 percent. The tax rate will remain at 10 percent starting July 1, 2024, as per the new gazette. Previously, a gazette on May 29 announced a reduction to 5 percent for the next 12 years, but this was corrected before taking effect. The NBR has offered tax benefits to manufacturers since 2009, initially at 5 percent for 12 years, raised to 10 percent from FY21, and including air conditioners. Without this benefit, manufacturers would face a tax rate of 20 to 27.50 percent. The NBR also removed a condition requiring manufacturers to reinvest 10 percent of tax-exempt income into expanding production. This change is seen as supportive for the industry, which includes 10 local companies producing refrigerators, freezers, and ACs. The domestic market for ACs has grown due to reasonable prices and climate conditions. Conversely, chest freezer sales dropped by 13 percent ahead of Eid-ul-Azha due to inflation and higher appliance prices. The motorcycle sector involves around 10 companies with annual sales of approximately 400,000 units.
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