In the budget for the next fiscal year, the federal government has increased the income and withholding tax by 600% on vehicle registration and vehicle ownership transfer levied on top of the token tax.
The former ‘one-time’ taxes have also been changed by the government to annual taxes and as a result, vehicle owners will have to have to pay an additional PKR 3,000 to PKR 200,000 for filers and PKR 6,000 to 400,000 for non-filers annually.
The Punjab Excise and Taxation Department is left dumbfounded by the impracticality of the tax structure and has asked for written clarification from the Federal Board of Revenue (FBR), suspecting an unintentional error in the finance bill.
According to media reports, the Excise and Taxation Department officials are concerned about the substantial increase in taxes.
Local car manufacturers collect a one-time withholding tax from the customers and write the information on their sales invoices but now, under the schedule 231 of the finance bill pages 154 and 155, it has been fixed annually on a per seat basis.
The complete list of withholding tax on the registration and transfer of vehicles is given below:
| Withholding Tax Per Seat | ||
| Category of Vehicles | Filer | Non-Filer |
| 851CC-1000CC | PKR 5,000 | PKR 10,000 |
| 1001CC-1300CC | PKR 7,500 | PKR 15,000 |
| 1301CC-1600CC | PKR 12,500 | PKR 25,000 |
| 1601CC-1800CC | PKR 18,500 | PKR 37,000 |
| 1801CC-2000CC | PKR 25,000 | PKR 50,000 |
| 2001CC-2500CC | PKR 37,500 | PKR 75,000 |
| 2501CC-3000CC | PKR 50,000 | PKR 100,000 |
| 3001CC and above | PKR 62,500 | PKR 125,000 |
As the above-mentioned table shows the value of tax per seat, we have calculated the total tax for each category for a 4-seater car which is as follows:
| Withholding Tax on Four-Seater Car | ||
| Category of Vehicles | Filer | Non-Filer |
| 851CC-1000CC | PKR 20,000 | PKR 40,000 |
| 1001CC-1300CC | PKR 30,000 | PKR 60,000 |
| 1301CC-1600CC | PKR 50,000 | PKR 100,000 |
| 1601CC-1800CC | PKR 74,000 | PKR 148,000 |
| 1801CC-2000CC | PKR 100,000 | PKR 200,000 |
| 2001CC-2500CC | PKR 150,000 | PKR 300,000 |
| 2501CC-3000CC | PKR 200,000 | PKR 400,000 |
| 3001CC and above | PKR 250,000 | PKR 500,0000 |
The government also wants to impose an income tax along with the annual token tax of the cars and the rate can be seen below:
| Income Tax on Annual Token Tax | ||
| Category of Vehicles | Filer | Non-Filer |
| 1001CC-1100CC | PKR 1,500 | PKR 3,000 |
| 2000CC and above | PKR 10,000 | PKR 20,000 |
There might be an unintentional error while preparing the finance bill according to the officials at the Excise and Taxation Department because the information provided in the bill is impractical and will be rejected by the public.
Although, if this information is correct, the officials added that they will start the collection from 1st July under the new rate and the department has upgraded its software to accommodate the changes.
Via Geo News
