Islamabad, August 30, 2025 – The Federal Board of Revenue (FBR) has issued the updated withholding tax card for Tax Year 2025-26, covering the period from July 1, 2025, to June 30, 2026.
The new rates primarily address advance tax applicable on motor vehicles at different stages, including registration, transfer of ownership, leasing, and sale.
Under Section 231B of the Income Tax Ordinance, 2001, the FBR mandates that every registering authority of the Excise and Taxation Department collect advance withholding tax at the time of registration of a motor vehicle. The tax rates differ for individuals listed on the Active Taxpayers List (ATL) and those not on it. No advance tax is to be collected after five years from the date of a vehicle’s first registration.
Additionally, leasing companies, scheduled banks, non-banking financial institutions, investment banks, and modarabas are required to collect advance tax at a rate of four percent of the vehicle’s value when leasing a motor vehicle to non-ATL individuals. Similarly, at the time of transfer of registration or ownership, advance withholding tax must be collected as per the prescribed rates, provided the vehicle is within five years of its first registration.
The regulations also apply to locally manufactured vehicles sold prior to registration by the original purchaser and to vehicles sold directly by manufacturers. However, exemptions apply to vehicles owned by the federal or provincial governments, local authorities, foreign diplomats, and diplomatic missions in Pakistan.
For tax year 2025-26, FBR aims to improve compliance and documentation within the automotive sector by ensuring effective advance tax collection mechanisms, thereby broadening the revenue base.
Following is the table of withholding tax card:
| Section | Engine Capacity | Tax rate for ATL | Tax rate for Non-ATL |
| Sub-section 231B(1) & 231B(3) | Up to 850 cc | 0.50% of the value | 1.50% of the value |
| Sub-section 231B(1) & 231B(3) | 851cc to 1000cc | 1.00% of the value | 3.00% of the value |
| Sub-section 231B(1) & 231B(3) | 1001cc to 1300cc | 1.50% of the value | 4.50% of the value |
| Sub-section 231B(1) & 231B(3) | 1301cc to 1600cc | 2.00% of the value | 6.00% of the value |
| Sub-section 231B(1) & 231B(3) | 1601cc to 1800cc | 3.00% of the value | 9.00% of the value |
| Sub-section 231B(1) & 231B(3) | 1801cc to 2000cc | 5.00% of the value | 15.00% of the value |
| Sub-section 231B(1) & 231B(3) | 2001cc to 2500cc | 7.00% of the value | 21.00% of the value |
| Sub-section 231B(1) & 231B(3) | 2501cc to 3000cc | 9.00% of the value | 27.00% of the value |
| Sub-section 231B(1) & 231B(3) | Above 3000cc | 12.00% of the value | 36.00% of the value |
| Sub-section 231B(2) | Up to 850 cc | Nil | Nil |
| Sub-section 231B(2) | 851cc to 1000cc | Rs. 5,000 | Rs. 15,000 |
| Sub-section 231B(2) | 1001cc to 1300cc | Rs. 7,500 | Rs. 22,500 |
| Sub-section 231B(2) | 1301cc to 1600cc | Rs. 12,500 | Rs. 37,500 |
| Sub-section 231B(2) | 1601cc to 1800cc | Rs. 18,750 | Rs. 56,250 |
| Sub-section 231B(2) | 1801cc to 2000cc | Rs. 25,000 | Rs. 75,000 |
| Sub-section 231B(2) | 2001cc to 2500cc | Rs. 37,500 | Rs. 112,500 |
| Sub-section 231B(2) | 2501cc to 3000cc | Rs. 50,000 | Rs. 150,000 |
| Sub-section 231B(2) | Above 3000cc | Rs. 62,500 | Rs. 187,500 |
| Sub-section 231B(2A) | Up to 1,000 cc | Rs. 100,000 | Rs. 300,000 |
| Sub-section 231B(2A) | 1,001cc to 2,000cc | Rs. 200,000 | Rs. 600,000 |
| Sub-section 231B(2A) | 2,001cc and above | Rs. 400,000 | Rs. 1,200,000 |
Special provisions in the First Schedule, Part-IV, Division-VII (clause 1) for rates against sections 231B(1) & 231B(3):
Provided that the value for the purpose of 2[ ] of the above Table shall be in case of motor vehicle –
(i) imported in Pakistan, the import value assessed by the Customs authorities as increased by customs duty, federal excise duty and sales tax payable at import stage;
(ii) manufactured or assembled locally in Pakistan, the invoice value inclusive of all duties and taxes; or
(iii) auctioned, the auction value inclusive of all duties and taxes:
Provided further that in cases where engine capacity is not applicable and the value of vehicle is Rupees five million or more, the rate of tax collectible shall be 3% of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.
Special provisions in the First Schedule, Part-IV, Division-VII (clause 2) for rates against section 231B(2)
Provided that where the engine capacity is not applicable and value of vehicle is Rupees five million or more, the rate of tax collectible shall be Rupees twenty thousand;
Provided further that the rate of tax to be collected under this clause shall be reduced by ten percent each year from the date of first registration in Pakistan.
Disclaimer:
The information provided in this article is for general informational purposes only and is based on publicly available data from official sources. While efforts have been made to ensure accuracy, no guarantee is given regarding the completeness or reliability of the content. Readers are advised to consult the Federal Board of Revenue (FBR) or a qualified tax professional for specific guidance related to tax matters. The author and publisher are not responsible for any losses or consequences arising from the use of this information.