FBR to Recover Lifetime Tax from Small Cars Owners

The Federal Board of Revenue (FBR) is considering collecting lifetime income tax from the owners of cars with engine capacities ranging up to 1,000 cc. Lifetime token tax is already collected by the provinces on small cars however now FBR is seeking to recover lifetime income tax from the lower middle class citizens.

Related: FBR Launches Action Against Tax Evaders in Auto Related Businesses

This will mean that an owner of up to 1,000 cc car, who is paying Rs 1,800 per year, including Rs 800 as income tax, will now be required to pay Rs 20,000, including Rs 10,000 as income tax in case of filer. The motorists will also bear additional ‘financial burden’ under the heads of professional tax, which is Rs 1,000 on lifetime token.

Non-filers who do not exist on the active taxpayers list will have to make an additional payment of Rs 10,000 effective from the 1st of July 2019. As the scheme largely targets car owners from the middle class, most of the people will take it as burden to pay in lump sum.

However people including pensioners, who are not required to file returns or statements, will have to submit an application to the income tax commissioner explaining that the person is not required to file returns for having no additional income. The commissioner is bound to reply within a month. In case of failure, the applicant will qualify for automatic exemption from the penalty of non-filer or not existing on active taxpayers list.

Related: FBR Denies Imposing WHT on Rickshaws and Motorcycles

In the Finance Act 2019, the interior ministry has introduced lifetime token tax on vehicles having engine capacity up to 1,000 cc from July. FBR spokesperson Dr Hamid Ateeq while talking to Dawn said that the decision of lifetime token tax was taken by the provincial excise department:

“We have no other option, but to collect in advance income tax along with lifetime token tax.”

Upon asking why the FBR had decided to collect advance income tax along with lifetime token tax, Mr Ateeq said that a car owner would not deposit income tax on yearly basis in case of payment of life token tax.

Related: Government to Ban Resale of New Vehicles

According to an excise department the move will help vehicle owners as they will get rid of the hassle of making queues at tax counters for payment of tax every year. However, the move to charge vehicle tax for life will bolster the government revenue.

From Dawn

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