In order to fulfill a number of demands of the International Monetary Fund (IMF), the government in addition to many other new taxes has increased the advance income tax on the registration of vehicles above 2,000cc under the amended Finance Bill 2023.
The amended Finance Bill 2023 sees the government imposing a fixed tax on imported and locally manufactured vehicles from 2,001cc to above 3,000cc. Under the new income tax slabs, the fixed rate of tax would be 6% of the value of a vehicle having an engine capacity of 2,001cc to 2500cc.
The fixed rate of tax would be 8% of the value of a vehicle with an engine capacity of 2,501cc to 3,000cc. Under the third revised slab, the fixed rate of tax would be 10% of the value of a vehicle having engine capacity above 3,000cc.
An advance tax has been levied on cars and trucks under section 231B of the Income Tax Ordinance of 2001. The Excise and Taxation Department requires that advance tax be collected at the times and rates set by each motor vehicle registering authority.
At the time of the transfer of registration or ownership of a motor vehicle, each motor vehicle registering authority under the Excise and Taxation Department shall collect advance tax at the rates mentioned. As long as no advance tax is collected under this subsection on the transfer of a vehicle after five years have passed after the date of the vehicle’s initial registration in Pakistan.
If the locally produced motor vehicle has been sold before registration by the person who originally bought it from the local manufacturer, then every motor vehicle registration authority of the Excise and Taxation Department shall, at the time of registration, collect tax at the rates mentioned. Every motor vehicle manufacturer is required to collect advance tax from the customer at the time of sale of a motor vehicle at the rate indicated.
Source: Business Recorder
A computer animation professional with over 23 years of industry experience having served in leading organizations, TV channels & production facilities in Pakistan. An avid car enthusiast and petrolhead with an affection to deliver quality content to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com