KARACHI, May 27, 2025 — The tax authorities in Karachi have reported a stunning 144% increase in tax collection from new car purchases during the first ten months (July–April) of fiscal year 2024–25, driven by a sharp rise in the sale of high-end vehicles across Pakistan.
According to officials at the local tax offices, Rs3.10 billion in withholding tax was collected on car sales from July to April FY25, compared to Rs1.27 billion in the same period last year. This significant increase reflects a surge in car buying activity, especially among higher engine capacity models.
Data from the Pakistan Auto Manufacturers Association (PAMA) supports this trend. Sales of cars with engine sizes of 1300cc and above rose by an impressive 47%, reaching 40,369 units sold — a major jump from 27,429 units in the same period last year. These premium car models are heavily taxed, which helped drive up overall collection figures.
Meanwhile, car sales in the 1000cc segment dropped sharply by 36%, falling to 3,919 units from 6,093 units previously. On the other hand, smaller vehicles with engines under 1000cc saw a 32% increase, with 38,981 units sold compared to 29,440 units in the same ten-month period of FY24.
FBR officials say that the rise in collection was not only due to more cars being sold, but also because of stricter enforcement of tax rules. Car dealerships and manufacturers are required to deduct and deposit withholding tax at the time of sale. They must also submit buyer details, such as CNIC or NTN numbers, ensuring every transaction is recorded.
Under Section 165 of the Income Tax Ordinance, 2001, entities that collect or deduct taxes must submit quarterly statements to the Commissioner of Inland Revenue. These statements detail buyer identities, tax amounts, and transaction particulars — helping track the boom in new car sales.
This surge in tax collection shows that while inflation and price hikes have hurt many sectors, the car market, especially in luxury segments, is still thriving and generating record-breaking revenue for the exchequer.