FBR Announces Sales Tax on Sale & Purchase of Used Cars

The Federal Board of Revenue (FBR) has announced the decision to collect sales tax from sales and purchases of vehicles and has issued a procedure for calculating sales tax in this regard.

The FBR has issued an SRO 931(I)2020 to amend Sales Tax Rules, 2006, Wednesday.

According to the FBR sources, the rules were introduced to collect sales tax on value addition on trading or sale and purchases of a used vehicle. The trader of the used vehicle is required to pay sales tax on the differential of sale and purchase value of the used vehicle. It is important to note that sales tax on the vehicle is already been collected at both manufacturing or import stage.

There is a restriction of input tax adjustment on input tax on vehicles in terms of section 8(1) of the S.T.A. 1990. Legally, once the entire component of sales tax on higher/maximum value of sales has already been collected at the import or manufacturing stage. Is there any justification for levying sales tax on the differential value on the trading of a used vehicle?

According to the FBR, where a registered person is engaged in the business of purchasing and selling used vehicles from the general public on which sales tax had already been paid at the time of import or manufacturing, the value of supply shall be worked out in accordance with the following formula, namely: A-B.

Where ‘A’ is the consideration in money, including all charges and fees but excluding the amount of sales tax charged, received by the registered person from the buyer of the used vehicle.

‘B’ is the consideration in money, including all charges and fees, paid by the registered person to the seller of the used vehicle. Provided, that the whole amount paid or received against the above-mentioned transactions is made through banking channel as required under Section 73 of the Sales Tax Act.

In case, a vehicle is sold at a price lower than its purchase price, the value determined under this sub-rule shall be deemed to be zero.

No input tax credit shall be allowed to the registered person, which is attributable to any goods or services acquired for the purposes of selling used vehicles, the FBR added.

Update

Federal Board of Revenue (FBR) has issued a clarification on the news appearing in print and electronic media regarding levying of 17 percent Sales tax on the resale of used and refurbished vehicles.

FBR has clarified that the existing law charged sales tax on full sale value which was harsh and excessive.

 


  • Ajeeb bat ha, einka bas chalay to aik aik fbr ka banda Har ghr k bhr ho jo logon ki potti pa tax lagai k ya eisnay kitny Wali potti ki ha……..
    Kamal herat ha k kitny jahil or fazool logon ko ijazat ha k hakomat k mamlat chalain

  • پاکستان کو بیوروکریسی اور جرنیلوں نے سوائے شراب نوشی،
    عورت ،اور جائیداد بنانے کے اور سیاسی دلال بنانے لوٹ مار کی کمائی بیرونی ممالک میں لے جانے کے کشمیر کے نام پر دھوکہ دینے کے کچھ نہیں کیا ڈالر جوا کھیل کر عوام کو مار دیا عمران خان نے کس کے کہنے پر کتنے بیورو کریٹ اور جرنیلوں پر مقدمہ بنے حالانکہ پاکستان کا ہر ادارہ کرپٹ ترین مافیا سے بھرا ہوتا ہے آسان طریقہ عوام پر ظلم اور ٹیکس لگا کر ان کو مارو ایک بھی مخلص عوام یا پاکستان سے آرمی چیف میں نے نہیں دیکھا اربوں روپے ماہانہ کی کرپشن کے شبوت دیے ایک سال 8ماہ ہو گئے عمران نے کچھ نہیں کیا جو باجوہ اسٹیبلشمنٹ حکم کریں اس پر سجدہ ریز
    22کروڑ عوام کو مار دیا عمران خان نے ڈالر جوا کھیل کر

  • I have sent FBR proves of billions monthly corruption along with Copies to selected Prime minister two years ago with 30 followed remider did nothing very simple to impose new varieties of tax, they are always engaged enemies of General public how to keep them depressed

  • lanat FBR teri zaat per kanjar awaam pay tax lagaa lagaa kar mardia hayyy car ke rates uski asal qeemat utni nhe jitny ka tax hayy. Bajwa chor imran chor Rasheed chor

  • It is also very unfortunate that people are selling used vehicle plus of its actual price like city 16 actual price was 16 but after passing 4 years demanding 21-23 , is it justified. Is it only salary class who has to pay taxes.

  • Need not to worry , as it will be only for those dealers who import at cheap price and later sell at higher price.

  • دنیا میں پاکستان ایسا ملک ہے جہاں عوام حکومت اور فوج کو پال رہے ہیں اور عوام کو کسی طرح کی بھی زندگی میں سہولت نہیں تعلیم پرائیویٹ علاج پرائیویٹ صفائ کا بندوست خود کرو ٹرانسپورٹ خود برداشت کرو اپنی جان و مال کی حفاظت خود کرو حکومت صرف عوام سے پیسے نکالے چاہے جس طرح بھی ہو ۔۔۔۔اگر سب کام خود ہی کرنا ہے تو پھر پاکستان میں رہنا کوئ باعث ثواب کام ہے ؟

  • Kabhi kabhi me ye sochta hn k quaid ne galti krdi Pakistan bana k. Hum awam govt or military k galat policy or un ki larai me qeemat hamein ada krni parti hai. Khuda humari jaan chiraa de en corrupt, khud parast logo se jo awam ki nh par apni soch rkhte hn

  • Imran khan ne FBR ke zariye awam ka joos nikal dia. Corruption aur hukoomti ikhrajat kam nahi kersakta. Sara ilzaam pichle hukoomato ka, aur awam ko ghabrana nahi.

  • So this government is also doing it’s best to squeeze dead nation. Keep it up Khan Sb and punish everyone for being Pakistani.

  • In my view, its another burden put on the shoulder of businessmen this will discourage the moral of businessman

  • بڑے افسوس کی بات ہے کہ پاکستان میں کوئی ایسی
    چیز نہیں چھوڑی ہے کہ جس چیز کا ٹیکس وصولی نہ کی گئی ہو، متوسط طبقہ کے لوگوں کے بس میں نہیں کہ وہ نئی گاڑی خرید سکے پس اب یہ راستہ بھی بند سمجھ لیں. کچھ دن کے بعد سانس لینے پر بھی ٹیکس لگا دیا جائے گا 🤧🤧🤧

  • Dear Imran Khan, you are supposed to bring fortune to the crippled people of this country but like past rulers you have also started looting the poor rather than helping them to stand on their feet. You are day night busy facilitating the rich making them more powerful than ever and on the other hand making the poor suffer harshly by putting tax on them. Why you are not able to get tax from those who are building multi story buildings and buying property one after the other now adays? How come despite the devastating poverty and deflated economy still these people buying property after property and luxury vehicles? How they are buying and running business and restaurants in foreign countries? I know one thing that if govt cruelty and injustice continues like this a time will come when everyone will come lord of the street and there will be much unrest. May God help us overcome corruption and an honest ruler come to save this country and the poor. Amin

  • duffer people parh tu lo pora , if resale value is higher then purchase value then tax applicable. matlab logon ka buisness ha k 10 lakh ki purcase ker k 11 ki bechatu tax pay kerna ha 9 lakh ki bechay tu nahi kerna

  • This is nonsense. Speechless to continue to see how stupid these decisions are and Govt is doing nothing but ruthlessly imposing taxes to rip off.

  • Black sheeps are found everywhere but sincere person are more or less found. As regards filing a complaint on Citizen portal is useless. I tried my level best and filed complaint number of times but no fruit full results seen.

  • ان کا بس چلے تو بلّی کے چھیچڑوں پے بھی ٹیکس لگا دیں پر ابھی تک ان کے ہاتھ پڑھی لکھی بلّی نہیں آئی۔۔


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