The Federal Board of Revenue (FBR) has issued revised rates for advance tax on the registration or transfer of motor car.
These rates, applied by provincial motor vehicle authorities under Section 231B of the Income Tax Ordinance, 2001, are aimed at streamlining the taxation process for individuals acquiring new locally manufactured motor vehicles.
Under the provisions of Section 231B, provincial motor vehicle authorities are mandated to deduct advance tax from individuals obtaining new locally manufactured motor vehicles and having them transferred into their names. The collection of this advance tax occurs at the time of registration, ensuring a smooth integration of the taxation process with the vehicle ownership procedures.
The newly issued withholding tax card for the tax year 2021/2022 delineates the rates of advance tax on the registration or transfer of motor vehicles based on their engine capacities. The rates are as follows:
1. Up to 850cc: Rs7,500 (for Active Taxpayers List – ATL) / Rs15,000 (not on ATL)
2. 851cc to 1000cc: Rs15,000 (ATL) / Rs30,000 (not on ATL)
3. 1001cc to 1300cc: Rs25,000 (ATL) / Rs50,000 (not on ATL)
4. 1301cc to 1600cc: Rs50,000 (ATL) / Rs100,000 (not on ATL)
5. 1601cc to 1800cc: Rs75,000 (ATL) / Rs150,000 (not on ATL)
6. 1801cc to 2000cc: Rs100,000 (ATL) / Rs200,000 (not on ATL)
7. 2001cc to 2500cc: Rs150,000 (ATL) / Rs300,000 (not on ATL)
8. 2501cc to 3000cc: Rs200,000 (ATL) / Rs400,000 (not on ATL)
9. Above 3000cc: Rs250,000 (ATL) / Rs500,000 (not on ATL)
It’s important to note that the rates differ for individuals on the Active Taxpayers List (ATL) and those not on the list. This differentiation encourages taxpayers to actively participate in the tax system by ensuring their inclusion in the ATL, potentially leading to reduced advance tax rates on motor vehicle transactions.
The tax collected or deducted under this category is adjustable against the total payable liability of the taxpayer. This mechanism allows individuals to offset the advance tax paid during the motor vehicle registration or transfer process against their overall tax liabilities, providing a measure of flexibility and fairness in the taxation framework.
As the FBR continues to adapt tax regulations, taxpayers are advised to stay informed about any updates or amendments to ensure compliance with the latest provisions. The issuance of revised rates for advance tax on motor vehicle registration and transfer reflects the government’s commitment to enhancing transparency and efficiency in the taxation system, while also encouraging active participation in the formal economy.
