Karachi, July 2, 2023: FBR, the Federal Board of Revenue, has implemented new advance tax rates on car registration effective from July 1, 2023.
These revised rates have been introduced through the Finance Act of 2023 and will be applicable across the country.
According to reliable sources within the FBR, the changes in the tax rates have been made under subsection (1) and (3) of section 231B of the Income Tax Ordinance of 2001. The amended rates are as follows:
| S. No. | Engine Capacity | Tax |
| 1 | upto 850 cc | Rs. 10,000 |
| 2 | 851cc to 1000cc | Rs. 20,000 |
| 3 | 1001cc to 1300cc | Rs. 25,000 |
| 4 | 1301cc to 1600cc | Rs. 50,000 |
| 5 | 1601cc to 1800cc | Rs. 150,000 |
| 6 | 1801cc to 2000cc | Rs. 200,000 |
| 7 | 2001cc to 2500cc | 6% of the value |
| 8 | 2501cc to 3000cc | 8% of the value |
| 9 | Above 3000cc | 10% of the value |
In the case of motor vehicles, the value for tax calculation purposes will depend on various factors:
(i) For vehicles imported into Pakistan, the value will be assessed by the Customs authorities, including custom duty, federal excise duty, and sales tax payable at the import stage.
(ii) For vehicles manufactured or assembled locally in Pakistan, the value will be based on the invoice value, inclusive of all duties and taxes.
(iii) For auctioned vehicles, the value will be the auction value, inclusive of all duties and taxes.
Furthermore, if the engine capacity is not applicable to a vehicle and its value exceeds Rs. 5,000,000/-, the tax rate will be 3% of the import value (including customs duty, sales tax, and federal excise duty for imported vehicles) or the invoice value (for locally manufactured or assembled vehicles).
These updated advance tax rates on car registration aim to streamline the taxation system and ensure a fair and equitable approach. It is expected that these changes will contribute to the overall revenue collection efforts of the government while also promoting transparency in the automotive sector.
Vehicle owners and potential buyers are advised to consult with tax experts or refer to the FBR’s official guidelines to determine the precise tax liability based on their vehicle’s engine capacity and value.
READ MORE: Progressive Rates of Super Tax with Increased Threshold Implemented from July 2023
