In a move aimed at broadening the tax net and encouraging tax compliance, the Federal Board of Revenue (FBR) has announced a substantial 200 percent increase in tax rates for individuals not appearing on the Active Taxpayers List (ATL) at the time of motor vehicle registration during the fiscal year 2023-24.
The FBR recently released updated withholding tax rates for the upcoming fiscal year, notifying the significant hike in tax rates under Sub-section 1 and 3 of section 231B of the Income Tax Ordinance, 2001.
The revised tax rates for motor vehicle registration based on engine capacity and ATL status are as follows:
| Serial No. | Engine Capacity | ATL | Non-ATL |
| 1 | Upto 850CC | Rs 10,000 | Rs 30,000 |
| 2 | 851CC to 1000CC | Rs 20,000 | Rs 60,000 |
| 3 | 1001CC to 1300CC | Rs 25,000 | Rs 75,000 |
| 4 | 1301CC to 1600CC | Rs 50,000 | Rs 150,000 |
| 5 | 1601CC to 1800CC | Rs 150,000 | Rs450,000 |
| 6 | 1801CC to 2000CC | Rs 200,000 | Rs 600,000 |
| 7 | 2001CC to 2500CC | 6% of the value | 18% of the value |
| 8 | 2501CC to 3000CC | 8% of the value | 24% of the value |
| 9 | Above 3000CC | 10% of the value | 30% of the value |
The FBR clarified that the value for motor vehicles, under serial numbers 7 to 9 in the above table, will be determined based on the following criteria:
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(i) For imported vehicles, the value will be the import value assessed by Customs authorities, including customs 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 the invoice value, inclusive of all duties and taxes.
(iii) In the case of auctioned vehicles, the value will be the auction value, inclusive of all duties and taxes.
Furthermore, the FBR specified that in cases where engine capacity is not applicable and the vehicle’s value is five million rupees or more, the rate of tax collectible shall 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.
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Senior FBR officers explained that the rationale behind imposing higher tax rates on non-ATL individuals was to encourage tax compliance and bring individuals with taxable income into the tax net. By penalizing those who fail to declare their income and assets and remain outside the tax system, the FBR aims to boost revenue collection and create a fairer taxation system for all citizens.
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This move is expected to have far-reaching implications for individuals looking to register motor vehicles, as it provides a strong incentive for taxpayers to ensure they appear on the ATL and comply with tax laws during the fiscal year 2023-24.
