The government in its recent financial amendment bill, allowed non-filers of tax returns to buy new cars. The restriction was imposed through Finance Act 2018, which caused hue and cry from various quarters, especially from local auto assemblers.
The ban on non-filers had badly hit car sales in Pakistan during the first 7 months of the current fiscal year 2018-19. Although the removal was expected to help regain the sales growth, but according to sources, non-filers purchasing new vehicles will still face difficult time despite recent approval by the government as the tax authorities have planned a prompt probe into the source of their income.
The government is not in favor of any measure that promotes un-documentation of economy. So any new car registered with a provincial motor vehicle authority by non-filers would immediately be screened.
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Federal Board of Revenue (FBR) has established digital links to obtain data of registration from provincial authorities. However, if real-time data connection is not available then the FBR authorities would sort out information on the basis of withholding statements provided by the provincial authorities.
Revenue collection would also rise at a faster pace as the government has enhanced tax rate on purchase of locally manufactured cars by 50% for non-filers. The decision to allow non-filers to buy new cars was taken to promote the domestic auto industry, as non-filers still could not own imported vehicles.
Related: 2018 The Year of Price Hikes
While automakers believe allowing non-filers to buy new cars will improve the declining car sales in the country, many still believe it’s the rising car prices that have pushed many buyers away. Vehicle prices in Pakistan were revised for up to 5 times in year 2018 with an increase of nearly Rs. 250,000 on each local assembled model amid depreciation of Pak Rupee against the US Dollar.