Tax Collection from Cars Drops by Millions

According to official data released on Tuesday, there was a 40% decline in the collection of withholding tax collection from the registration of new cars in the first nine months of the current fiscal year.

In this period, Rs. 700 million was collected from new car registrations in the first nine months of FY2020 compared to Rs. 1.162 billion in the same period of the last fiscal year.

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The same was the case for the withholding tax collected from transfer of vehicles; it amounted to Rs. 782 million as compared to Rs. 905 million. This was stated by the Regional Tax Office (RTO-II) Karachi, which holds jurisdiction over the collection.

As per the sources in RTO-II, the slowdown in economic activities and the increase in prices has slowed the auto sales.

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Data by the Pakistan Automotive Manufacturers Association shows that car sales fell by 47% during the first nine months of FY2020 when compared to the same period last year and for the month of March they dropped by 70% when compared to March 2019.

The sources said that the tax collection for April will fall as there was a substantial fall in car sales in March. They also said that the fall in tax collection from car purchases is also due to new measures such as 100% additional tax on non-compliant taxpayers.

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