The first draft of the Annual Budget 2022-23 is here, presented by our Finance Minister Miftah Ismail in the National Assembly. The new budget has proposed to increase the Advance Tax, also known as With-holding Tax, on luxury vehicles.
As per the official document, the government wants to increase the Advance Tax on cars above 1600cc to transfer the tax burden to the privileged class. The document does not specify the new rate of Advance Tax for filer citizens. For non-filers, the Advance Tax will be doubled, from 100% to 200%.
Here are the cars that will be affected if the National Assembly approves this Annual Budget 2022-23 proposal.
Cars above 1600cc up to 1800cc
We have three variants of one sedan in the 1601cc to 1800cc category. The current Advance Tax on these cars is Rs. 75,000 for filers and Rs. 150,000 for non-filers.
- Toyota Corolla (1.8L Altis X CVT, 1.8L Altis Grande Beige Interior, 1.8L Altis Grande Black Interior)
Cars above 1800cc up to 2000cc
We have two locally assembled sedans and two crossovers in the 1801cc to 2000cc category. The current Advance Tax on these cars is Rs. 100,000 for filers and Rs. 200,000 for non-filers.
Cars above 2000cc up to 2500cc
There’s one locally assembled sedan, one crossover (in two variants), and one pick-up truck in the 2001cc to 2500cc category. The current Advance Tax on this car is Rs. 150,000 for filers and Rs. 300,000 for non-filers.
- Hyundai Sonata 2.5L
- Kia Sorento (2.4L FWD, 2.4L AWD)
- ISUZU D-Max
Cars above 2500cc up to 3000cc
We have one locally assembled SUVs and one pick-up trucks in the 2501cc to 3000cc category. The current Advance Tax on these cars is Rs. 200,000 for filers and Rs. 400,000 for non-filers.
Cars above 3000cc
We have one locally assembled crossover (in one variant) in the above 3000cc category. The current Advance Tax on these cars is Rs. 250,000 for filers and Rs. 500,000 for non-filers.
To be clear, all the above non-filer Advance Taxes will be doubled, and filer Advance Taxes will increase (How much? We don’t know yet). Let’s see if the proposed budget gets approved by the National Assembly.
Share your questions and feelings about the Advance Tax hike for cars above 1600cc. Stay tuned to find out more about the annual budget 2022-23.
In my view, a person who can afford to buy a vehicle with an engine over 1300 CC engine cannot be called a poor man or the middle income person because Pakistan is a primary-based economy and for it producing technical goods is very expensive and lower taxes would mean higher buying, thereby resulting in increased outflow of reserves.
Furthermore, the government might also consider imposing higher taxes on the cars that need higher maintenance, these taxes would goad public into buying durable cars and in this way, reserves could be saved in shape of lower number of car parts being imported.