Karachi, December 31, 2023 — The Federal Board of Revenue (FBR) has announced the tax rates applicable to new car purchases for the tax year 2024, with significant disparities between individuals listed on the Active Taxpayers List (ATL) and those not on the list.
The tax brackets indicate a substantial increase for non-ATL individuals, reaching up to 200 percent more than their ATL counterparts.
The FBR’s notification outlines the following tax rates for new car purchases based on engine capacity:
1. Up to 850 cc:
• ATL: Rs.10,000
• Non-ATL: Rs.30,000
2. 851cc to 1000cc:
• ATL: Rs.20,000
• Non-ATL: Rs.60,000
3. 1001cc to 1300cc:
• ATL: Rs.25,000
• Non-ATL: Rs.75,000
4. 1301cc to 1600cc:
• ATL: Rs.50,000
• Non-ATL: Rs.150,000
5. 1601cc to 1800cc:
• ATL: Rs.150,000
• Non-ATL: Rs.450,000
6. 1801cc to 2000cc:
• ATL: Rs.200,000
• Non-ATL: Rs.600,000
7. 2001cc to 2500cc:
• ATL: 6% of the value
• Non-ATL: 18% of the value
8. 2501cc to 3000cc:
• ATL: 8% of the value
• Non-ATL: 24% of the value
9. Above 3000cc:
• ATL: 10% of the value
• Non-ATL: 30% of the value
The FBR clarified that the value for categories 7 to 9 shall be determined based on the vehicle’s import value (increased by customs duty, federal excise duty, and sales tax), invoice value (inclusive of all duties and taxes) for locally manufactured or assembled vehicles, or auction value (inclusive of all duties and taxes).
Furthermore, in cases where engine capacity is not applicable and the vehicle’s value exceeds Rupees five million, the tax rate for both ATL and non-ATL individuals shall be 3 percent of the import value (increased by customs duty, sales tax, and federal excise duty for imported vehicles) or invoice value for locally manufactured or assembled vehicles.
This move by the FBR seeks to encourage taxpayers by offering more favorable tax rates to those on the ATL while imposing significantly higher levies on those not on the list. The rationale behind such a strategy is to bolster tax compliance and incentivize individuals to join the Active Taxpayers List, contributing to the broader goal of expanding the tax base in the country.
As the new tax rates come into effect, the impact on the automotive industry and consumer behavior remains to be seen. The FBR’s approach reflects a dual objective of revenue generation and promoting tax transparency, aligning with broader government initiatives to strengthen fiscal discipline and economic stability.
