Government to impose a new bag of taxes on vehicles


Update:

A lot of confusion emerged in the local automotive industry when the government passed the Finance Bill and introduced a new taxation system for collecting taxes on the car. The most surprising factor of this new taxation system was the imposition of tax on cars per annum keeping in view the seating capacity of the vehicle. Moreover, in the bill, a mind-boggling increase in the income tax and withholding tax on the registration of cars were introduced.

However, now, after much fuss, the FBR has responded and asserted that the Finance Bill had typing error which has been fixed in finance act. There is no tax being levied on private cars per seat. Moreover, the authority also said that there is no change in the car’s registration and token tax fee.

Previous:

In its finance bill 2019-20, the Government has announced a mind-boggling increase in the income tax and withholding tax on the registration and transfer of vehicles, which is equivalent to dropping a tax bomb on the consumers.

The government in its finance bill has changed the taxation system from one-time to the annual levy, which is certainly very bad news for the consumers of the automobile sector. The latest imposition of taxes on the registration, transfer and annual token tax fee is impractical in nature and the purchase of new and old cars, both would become a difficult task for the consumers. The government in its new policy has divided the cars into 8 slabs in accordance with the engine displacement. The most surprising factor of this new taxation system is the imposition of tax on each seat of the vehicle. The withholding tax will be fixed on an annual basis depending upon the number of seats of a vehicle. However, there will be a separate fee for both filers and non-filers. The non-filers are being targeted to a great extent in this policy with a double fee as compared to what non-filers will have to pay. The complete list of withholding tax on the registration and transfer of vehicles is given below:

As mentioned above, on vehicles from 851 cc to 1000cc, the consumers (non-filers) will have to pay Rs.10,000 per seat. There will be a withholding tax of Rs.7500 and Rs.15000 on vehicles from 1001 cc to 1300cc respectively. The vehicles with engine displacement from 1301 cc to 1600 cc will be bound to pay Rs.12,500 and Rs.25,000 by filers and non-filers respectively. Similarly, the withholding tax goes all the way up to Rs.125,000 (non-filers) for vehicles over 3001 cc engine displacement. With the above amount of tax on each seat, the categorization with respect to a 4-seater vehicle is calculated as below.

The above table shows that the new annual taxation on the registration and transfer of vehicles is highly unjustified. In a country like Pakistan, where a large proportion of population comprises of the middle class, it’s certainly a discouraging step to impose such a high amount of withholding tax, especially on cars under 1300cc. It is pertinent to mention here that the annual withholding tax will be applicable not only on the registration of a vehicle but for as many times it’s transferred to a new owner.

On the other hand, the government has also announced to collect income tax along with the annual token tax of the cars. For cars from 1001 cc to 1100 cc engine displacement, the users will have to pay Rs.1500 (filers) and Rs.3000 (non-filers). Similarly, all the cars over 2000 cc engine capacity, there will be an income tax of Rs.10,000 (filers) and Rs.20,000 (non-filers) to be paid along with the annual token tax.

The new policy of the government will clearly get rejected by the general public due to the non-practicality. However, the officials of the Excise and Taxation department are also unsure about the facts and figures mentioned in the finance bill as they believe there might be some typographical error. But, the officials ensured that if the tax schedule is correctly mentioned in the bill, it will be implemented with immediate effect from 1st July 2019. The department has already updated their software to make all the necessary changes in the previous rates.

In my humble opinion, it is unjust to put an additional burden of withholding tax on the consumers with each registration and transfer of a particular vehicle. What are your thoughts regarding the finance bill? Let us know in the comments section below. This is a developing story so stay connected for further updates.


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Apart from being an Electrical Engineer by profession, he is an automotive content writer at PakWheels, a web designer and a photographer.

  • TiredOfThisShit

    There should be severe penalties including impounding/forfeiture of vehicle and putting current purchaser/owner in jail for a minimum of 3 months if vehicle is being driven on open letter and is not transferred in current owner’s name within 1 month of transfer deed.

  • Cgill

    Well tax is the same as before . Just structure is changed to per seat from fixed.
    WHT on 1300 cc car is 30 and and now 7500 per seat which is again 30k.
    Only people buying big suv’s will effect from this.
    Income tax is also the same. It was 10k for 2000cc + and still the 10k.
    Either you are missing something or tax is not increased at all

  • Jawed Ahmed

    That’s good. See the point WHT is adjustable. Road tax is usual. Registration fee, yes that’s new but again why a difference between a new purchase and old purchase. The people who are really going ng to be hurt are ” non-filers” haha ha. I love it. Ba***rds so called “non-filers”.

  • omar zafar

    In every country across the world everyone has to pay a tax to drive the car, van, bus lorry etc on the road, this is no different. We Pakistanis expect an over night change to a country which has been robbed and put under severe debt. Everyone needs to pull together and do there bit for improvements, I can also see the taxes are same as before, thos who dont pay should have cars impounded and fined, if they dont pay the fine withings 30 days that vehicle should become the property of the state and be auctioned off on the same note to make the tax affordable it should be spread over the year into monthly installments……… this is just my opinion.

  • asif munir

    First of all i am really shocked that pakwheels has given a totally wrong idea above. 1 they missed slab upto 850cc in which all 660cc car are also part of new tax policiy.
    1-For 660cc and upto 850cc vehicals there is 7500 per seat tax for filer and 15000 per seat for non filer.
    2 for 850 to 1000 cc vehicals there is 15000 per seat tax for filer and 30000 per seat for non filer.

    Dear pakwheels please have some educated employees that know the system well….
    a guy below saying ha ha ha dont know that govt has increased tax X4 times on filers also

  • asif munir

    also that this is not one time tax . you have to pay it every year at decrease to 10% per year means after ten years it will be ended.

  • asif munir

    actually govt has imposed tax in multiplication of X22 twenty two times which is spread over ten year of tenure.
    feel free to calculate yourself.

  • Waqas Tariq

    Yeah, let’s not show tax’es for 660cc cars and cry about the taxes on luxury cars. The taxes are perfect, if you can afford to buy a bigger car, pay more taxes.

  • enggr hassam

    Pl guide me as if one has not paid token tax for 3 years of 1328 cc car. He would have to pay 1.5 lacs?
    Or this is only applicable from now on and only for new cars

  • Farok

    Moron , what do u know about whats happening in pk ?
    Go and ride a bicycle from shahdarato defence lahore in 47c and then speak
    Idiot is there any public transport in the banana republic of pk ruled by a drug addict? Retard!!!

  • omar zafar

    I know a lot more than you for a start, secondly your an example of lack of intelligence in a beautiful country and the list can go on however I will not lower my self to your level. When you have intellect then do reply.

  • St

    Dear all, I am just looking for a short clarification. Is this annual “withholding” tax is to be paid by all the current owners of the cars just like how they pay annually the car token tax? For example, if my mother owns a civic (exi) since last 12 year (2007 model), is she supposed to pay this “withholding” tax of 12.5k x 4 seat = 50k annually?

    Or this withholding tax applies only when you buy or transfer a car to someone else?

    This token tax I know is an annual thing, which my mother has been paying since last 12 years (last year the amount was some 5k Pak Rs).

    Thanks.

  • Respectable Citizen

    please share the authentic source of these figures you have mentioned above. Honestly speaking i have not seen these figures anywhere in the budget except for the FED.
    Please share the source to prove your content.
    Regards

  • Usman

    Farok is right.
    This is Pakistan buddy. Not everyone can afford to pay this tax.
    Public Transport is non existent!
    First tabdeeli should be to make public transport available.
    A person who owns a mehran is making barely enough to survive let alone save.
    WIth the increase in prices of everything, put this on their heads is another big blow.

    With respect, Imran khan and his people should visit the poor localities and see how they are making ends meet.

    And what level are you on? Drop down to the level that most Pakistanis are living in and then judge!

  • omar zafar

    Firstly I agree with your statement that not everyone can afford the tax and public transport should be improved and made affordable to everyone.

    With all due respect although am born outside of Pakistan when I visit which is very regularly I live simple and travel using local buses and local transport and not show off.

    Am sorry but the language used by Farook is not one of an intellect so will always be responded to with negativeaty.

    Anyways I viewed my opinion and rightfully so just as everyone has an opinion on international affairs we do too with rights of course as I do pay Into the tax system of Pakistan with assets we own.

  • Zeeshan

    Talking about 1300cc category:

    WHT earlier was 25,000 on new registrations, and 7,500 for transfers.

    WHT now is 25,000 per seat or 100,000 for 4-seater per annum for new registrations, and 7,500 per seat or 30,000 for 4-seater per annum for transfers.

    The Income Tax you talk about for 2000cc was 10,000 earlier, and now it is 10,000 per seat, that is 40,000 for a 4-seater, per annum.

    In essence it means old taxes are multiplied by 4 and further multiplied by numbers of years. It isn’t just about structure afterall.

    However this “per annum” thing on both new registrations and transfers is confusing, even contradictory, and needs clarification from the authorities.

  • Respectable citizen

    Such Misleading information. Pathetic

  • Sahl-ul-Islam

    What about >1000 CC cars?? A Lifetime token of (Rs.10,000) was paid @ the time of registeration, do we still have to pay something annually?? Some token/income/advance/professional tax?? & how much??

  • Khan Ji

    Wow Amazing, I just calculated annual token tax of my Honda BRV (Lahore registered) and found below. The increase in income tax is 600%. I’m an overseas Pakistani and my income isn’t taxable as per the constitution of Pakistan but the worst form of taxation and worst system making people to avoid paying taxes.

    MOTOR VEHICLE TAX: 17,500 Rs
    INCOME TAX: 17,500 Rs
    PROFESSIONAL TAX: 200 Rs
    REBATE: -1,750 Rs

  • Abdul Wahab Butt

    @Ahmed Shehryar bhai. it was your mistake. You started bashing without proper clarification and all. Everyone on this forum was saying, it must be a mistake or misunderstanding at your end but you did not care to respond to any of these queries.

    I never expect such ignorance from PakWheels. I hope this never happen in future.

  • M Salman

    Are there any final update on new car registration at Karachi?. Today i contacted to toyota point motors regarding registeration of my new Altis 1.6. According to them, their agent at civic center Karachi have confirmed that all new registrations are still being done at new rates i.e approx 230,000 for Toyota Altis 1.6. According to Registration dept at Sindh Excise office at Civic Center, they have not received any written notification regarding reversal of new rates hence they continue with the new rates.

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