The government recently announced the budget for the fiscal year 2018-19. It was announced in the budget that any eligible person whose name doesn’t appear on the Active Taxpayers’ List will not be able to purchase vehicles. The ban will be applicable on both locally manufactured vehicles as well as imported ones.
Furthermore, the non-filers of tax returns will not be able to buy any property worth over Rs 4 million either.
The decision to put a ban on non-filers’ purchase of vehicles will not be welcomed by the auto-sector as it will highly affect their sales. The reason behind this is that major part of Pakistan’s population doesn’t file returns.
The Reservations
The auto sector has already shown its reservations over the government’s decision. Stakeholders say that this will encourage investors to buy cars and sell them on premium to non-filers. One of the industry officials added;
It will jeopardise all our efforts to counter the menace of premium, as the decision will motivate investors to buy cars and sell to non-filers on a hefty premium.
The official advised that government should charge extra tax from non-filers which will increase the revenue. However, the government is already charging additional taxes from non-filers which haven’t proved to be very effective in increasing the tax net.
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The auto sales are currently through the roof. The sales saw an increase of 22% –Â 192,734 units in nine months of 2017-18 – as compared to last year. At this time, when the market is booming, the official adds that it will impede the sector’s growth. Big players like Kia and Renault have vowed to enter the Pakistani market and this new move could potentially damage their entry, the official said.
Another sector could possibly benefit from government’s announcement is the banking sector. An analyst told;
Right now, the only way out I see is if people start filing tax returns. The other way that could work is if you lease the vehicle through a bank. Even then, you will have to become a filer by the time the lease period ends.
The sales and prices of used vehicles might boom as well in case parliament gives the final go-ahead to this decision. Once approved, the new policy will be effective from 1st July 2018.
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Government’s Stance
As per the initial responses, the government seems to stand firmly on its decision. FBR’s Member Inland Revenue-Policy and spokesman Dr Muhammad Iqbal mentioned;
Those on the ATL will be able to buy cars. It will be the responsibility of the companies to see if their customers feature on the list.
Iqbal added that non-filers will surely look for alternatives to avoid filing their returns. He told that one of these could be asking a filer to buy the vehicles on non-filers’ behalf. However, Iqbal alerted;
This is a risk the market will take. If a filer allows the non-filer to buy the vehicle he will have to explain the source of income (in his returns).
Pakistan currently has one of the lowest tax filing numbers in the world. According to statistics, only 1.26 million out of the 200+ million population file their returns. The number makes up only 0.6% of the total population which shows how ineffective authorities have been in collecting taxes.
The new decision will surely affect the sales, however, it might encourage non-filers to file the tax returns and increase the tax base of the country.
Via ET
Indeed good decision.
very nice.
Bold and very good decision by Government
Hope that Govt will sustain the pressure and implement it in true spirit
The decision will change the tax culture in Pakistan
Reservations from so called “Auto” and “Property” sector is unjustifiable and there will be end to black market / hoarding
We need tax money for our future generation’s prosperity and to get rid of loans
And what about the tax they charge on petroleum products and other consumer Product. Then they said the awam didn’t pay tax.
17% on everything
Penalizing non-filers has only lead to increased use of informal methods to buy and sell. Increasing cash in circulation and off the books deals. This measure will also lead to the same.
For example the article says you can’t buy property worth more than 4 mill if you are a non-filer. That is incorrect. You can’t buy property that has a *declared* value of more than 4 mill. People routinely declare lower values to avoid stamp duty. So 4 mill declared value means at least 4 crore market value today. With this measure people will be encouraged to understate the value of the property even more. Corruption will increase.
Dollarisation will also increase. We’ve already seen the effects of that with the widening gap between the interbank rate and the open market rate.
and will leads to devaluation of properties…. i believe is a good thing in Pakistan
Property should devalue a bit. It doesn’t make any sense that 1 marla shop in lahore selling for over 1 crore rupees.
Perhaps a very good decision. It should be implemented before… Its not late yet.
I am a student and I want to buy a new vehicle after 6 months. How I can be filer? Policies are made by mentally ill people in pakistan. There must be a policy that all Pakistani must be able to buy a vehicle on his name ( once in ten years) without any difference between filer or non filer .
Salman if u hav enough money to buy vehicle then you need to file return and show your source of income… read some basics of income tax its not about salary only…
Source of income? My father gave me money as a gift. Now can I be filer? Please tell.
And if I want to get a car on installment so that I can earn as careem captain , no bank gives me loan because I can not have a source of income to date…. it is all rubbish policies … policies just to help rich people. Nothing else.
Ask your father to purchase that car for you instead of giving you the money. Amount for the car is not a normal gift money,
Yes u can be a filer, if u do not have any source of income.
Actually we are not habitual of any legal policies, we have been living freely till now that’s why we bash about it. There are more complicated and strict restrictions around the world.
You can easily become a filer. If your father gifting you money he should have enough “white money” to gift you.
What if a HOUSE WIFE wants to buy a new car on her name? Should she become a filer? How she can become a filer? Should she get money from her husband when ever she has sex? And give a proof of receipts of sex ? Mentally sick people in our finance division . They DONOT give any solutions . They just say filer, non filer. Filer , Non-filer, . And if someone’s tax is deducted at source as in case of govt employees, he/ she must be considered as tax payer and must be treated as filer.
Mentally sick people in finance division and FBR, making yes sir yes sir , okay sir policies.
Great proposal. Should be approved by the parliament.
If you don’t want to pay a premium, file your tax return.
The same measures if taken to curb corruption and punish politicians would increase the trust of people and most will join the filer club. There is general perception that tax money is some kind of punishment and the big chunk goes into the pockets of politicians. This paradigm needs to be changed, otherwise by force you can’t achieve the filer club targets because pakistani geniuses will always find another way.
Don’t mislead by using such titles.
I think FBR is doing best. If we see the road conditions in Karachi during buisy hours it is complete chaotic, with mostl new cars, motor bikes on the road. FBR incentives to purchase cars on Lease Rental amortising payment for few years. It is the sacrifice of FBR for the purchase of Lease Rental Cars, Bikes, which will be taken as expense. A suggestion to tag., this with Car Sharing Mobile Phone App., which allows multiple passengers can use App., Based Taxi towards their destinations, which will be applicable from NADRA verification and mobile App., for Bike, and car. This is in all civilised countries, and societies, and socially accepted after consent of the travelling public which are members of the company. This will reduce pressure of many cars running, as they will be shared by registered/verified with NADRA in the loop of verification. Karachi should essentially be targeted as this will relieve rush on public transport, buses, Chingchi, Rickshaw etc.., A study tour to any Western country explaining the Road Safety and Save Human Lives, while crossing road, pedestrian, bicycles, Bicycle Track. We have no source of data on injury, etc., on Roads of Karachi.
And people were waiting for new car manufacturers… :D This move will be too much aggressive and I wouldn’t be surprised if it doesn’t make its way though parliament. They should let non filers buy the cars just raise the charges for non filers. I hope new entrants could break monopoly of suzuki and honda.
it’s really appreciated but we know koi is pr amal ni krne wala
Government Of pakistan must not bow before the Auto making Mafia which is trying to blackmail the Government as it is they are making haefty profits on each Unit they sell as in comparision by the same companies in neighbouring countries,
Don’t worry tax evaders you can buy most cars under 4 million. Enjoy
4 million bar is for property aka real estate only.