New rate card sets vehicle withholding tax based on engine capacity and ATL status under Finance Act 2026
ISLAMABAD: The Federal Board of Revenue (FBR) has issued the withholding income tax rate card for motor vehicles for Tax Year 2027, setting out applicable rates under Section 231B of the Income Tax Ordinance, 2001.
The rate card specifies different withholding tax rates according to vehicle engine capacity and the taxpayer’s status on the Active Taxpayers List (ATL).
Tax on registration or purchase of motor vehicles
For vehicles covered under Sections 231B(1) and 231B(3), ATL taxpayers will pay withholding tax ranging from 0.5% to 12% of the vehicle value, depending on engine capacity.
Non-ATL taxpayers will pay three times the applicable ATL rate.
| Engine capacity | ATL rate | Non-ATL rate |
| Up to 850cc | 0.50% of value | 1.50% |
| 851cc–1,000cc | 1.00% | 3.00% |
| 1,001cc–1,300cc | 1.50% | 4.50% |
| 1,301cc–1,600cc | 2.00% | 6.00% |
| 1,601cc–1,800cc | 3.00% | 9.00% |
| 1,801cc–2,000cc | 5.00% | 15.00% |
| 2,001cc–2,500cc | 7.00% | 21.00% |
| 2,501cc–3,000cc | 9.00% | 27.00% |
| Above 3,000cc | 12.00% | 36.00% |
Fixed tax under Section 231B(2)
The rate card also specifies fixed withholding tax amounts under Section 231B(2).
For ATL taxpayers, the amount ranges from nil for vehicles up to 850cc to Rs62,500 for vehicles above 3,000cc. For non-ATL taxpayers, the corresponding amounts range from nil to Rs187,500.
| Engine capacity | ATL | Non-ATL |
| Up to 850cc | Nil | Nil |
| 851cc–1,000cc | Rs5,000 | Rs15,000 |
| 1,001cc–1,300cc | Rs7,500 | Rs22,500 |
| 1,301cc–1,600cc | Rs12,500 | Rs37,500 |
| 1,601cc–1,800cc | Rs18,750 | Rs56,250 |
| 1,801cc–2,000cc | Rs25,000 | Rs75,000 |
| 2,001cc–2,500cc | Rs37,500 | Rs112,500 |
| 2,501cc–3,000cc | Rs50,000 | Rs150,000 |
| Above 3,000cc | Rs62,500 | Rs187,500 |
Additional tax under Section 231B(2A)
The FBR rate card also provides fixed amounts under Section 231B(2A).
For ATL taxpayers, the withholding tax is Rs100,000 for vehicles up to 1,000cc, Rs200,000 for vehicles between 1,001cc and 2,000cc, and Rs400,000 for vehicles of 2,001cc and above.
For non-ATL taxpayers, the respective rates are Rs300,000, Rs600,000 and Rs1.2 million.
| Engine capacity | ATL | Non-ATL |
| Up to 1,000cc | Rs100,000 | Rs300,000 |
| 1,001cc–2,000cc | Rs200,000 | Rs600,000 |
| 2,001cc and above | Rs400,000 | Rs1,200,000 |
Rate card updated under Finance Act 2026
The withholding tax card has been updated up to June 30, 2026, in accordance with the Finance Act, 2026.
The FBR said the card has been issued to facilitate taxpayers, withholding agents and other stakeholders in determining the applicable withholding tax on motor vehicles.
However, the FBR clarified that the original Income Tax Ordinance, 2001, as amended from time to time, will prevail in the event of any contradiction or error in the rate card.
The card further states that it cannot be treated as a legal document before any court or legal forum and cannot be used as a substitute for statutory proceedings.
The latest rate card provides taxpayers and withholding agents with a consolidated reference for motor vehicle withholding tax obligations during Tax Year 2027.