Budget 2017-18: Withholding Tax on Cars Slashed for Tax Payers

In order to encourage compliant taxpayers, withholding tax on registration of motor vehicles is proposed to be reduced from Rs 10,000 to Rs 7,500 for engine capacity upto 850 CC, and from Rs 20,000 to Rs 15,000 for engine capacity between 851 CC to 1,000 CC and from Rs 30,000 to Rs 25,000 for engine capacity between 1001 CC to 1,300 CC.

Government, in its budget 2017-18 proposal, said that the rates for non-filers will remain unchanged.

To provide relief to the unemployed youth, exemption from collection of advance tax on vehicles leased under the Prime Ministers Youth Loan Scheme has also been proposed.

Reduction in sales tax on local supply of Hybrid Electric Vehicles

In order to promote use of energy efficient motor vehicles, the reduced rates of sales tax available at import stage are proposed to be made applicable on local supply of these vehicles as well.

Other Auto Sector Proposals:

Following measures are proposed:

  • Current concessionary rate of customs duty and taxes, which is 50% of the total applicable duty and taxes, will continue on the import of Hybrid Electric Vehicles (HEVs) up to 1800 CC and 25% concession on total duty and taxes will be available for vehicles with engine capacity between 1801 and 2500 CC.
  • Auto Development Policy 2016-17 provides for incentivizing fully electric vehicles to promote fuel conservation and arrest environmental degradation. A package for relief in duty on these vehicles will be announced within three months.
  • Currently ten components for local assembly/manufacturing of Trailers can be imported at concessionary rate of 5% Customs duty. On the recommendation of EDB Eleven (11) more components are being included in view of diversified requirement of trailers for upcoming CPEC projects.


  • what about 1800CC and 2000CC, their taxes should be reduced as well for Filers

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