The Economic Coordination Committee (ECC) has approved imposition of additional withholding tax (WHT) of up to Rs 200,000 on sale of newly purchased vehicles in order to tackle the culture of premium/ own/ on money above the invoice price on new cars.
According to information, the additional withholding tax on new cars will be imposed at the time of their first registration in the name of second buyer. A tax levy of Rs 50,000 will be charged on 1,000cc & below cars, Rs 100,000 on 1,000cc to 2,000cc cars and Rs 200,000 tax on vehicles of more than 2,000cc engine displacements. The additional WHT will be charged to people who sell newly purchased local assembled vehicles within three months of delivery.
For long, the authorized dealers of auto assemblers in connection with investors were largely involved in the illegal practice of charging premium on sale of new cars. Therefore the added tax has been slapped to discourage the demand for premium that a buyer currently pays in the range of Rs 50,000 to Rs 600,000 over and above the invoice price just to get delivery of vehicle on time.
The tax has initially been approved for imposition till June next year and will be implemented through an amendment to the Income Tax Ordinance, subject to clearance by the federal cabinet.