The new rates will be notified shortly.
Automobiles
The 2015-16 budget proposes to reduce the withholding tax on ownership transfer fees and the annual tax tokens for privately-owned cars.
“On demand of the provincial governments, the rates of adjustable advance income tax collected with token tax is proposed to be
reduced by around 20 to 25 per cent in the case of income tax returns filers,”
Finance Minister Ishaq Dar told parliament on Friday.
“The rate of adjustable advance income tax collected on transfer of vehicles is proposed to be reduced by around 75 per cent in the case of income tax returns filers and by around one-third in the case of non-filers,” he said.
People from the automobile industry criticised the PML-N government’s decision to levy withholding taxes on automobile registration, and car dealers say many people preferred not to transfer ownership of vehicles to their name to save on taxes.
Currently, transferring the ownership of a five-year-old Toyota Corolla costs around Rs150,000, while a Suzuki Mehran 800cc costs Rs10,000 to transfer. However, tax payers can save nearly half that amount by producing their returns.
Mohammad Irfan, a car dealer from Rawalpindi, said that a lot of people he knew avoided transferring vehicles to their name in 2014-15, forcing provincial governments to raise objections to this tax. He said that last year, he had sold more than 100 cars, but none of the owners bothered with transfer documents.
The annual token tax on an 1800cc vehicle was around Rs12,000 , while an 800cc vehicle’s token fee is just over Rs1,300.
Published in Dawn, June 6th, 2015