KARACHI: Federal Board of Revenue (FBR) has been urged to revise slabs of engine capacity of motor cars to give benefit to buyers in payment of withholding tax.
Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2021/2022 submitted to the FBR, said that advance tax under section 231B of Income Tax Ordinance, 2001 is collected by manufacturers on following categories:
On engine capacity 1001cc to 1300cc the advance tax is collected at Rs25,000.
While on engine capacity 1301 cc to 1600cc the advance tax is collected at Rs50,000.
OICCI recommended that as locally manufactured sedans passenger cars fall slightly above the 1300cc category the slightly higher engine capacity size results in these vehicles falling in higher tax bracket making it more expensive with higher upfront cost to customers.
Amendment should be made in the categories of vehicles mentioned in Division VII of Part IV of First Schedule as follows:
On engine capacity 1001cc to 1350cc the advance tax rate should be Rs25,000.
While on engine capacity 1351 cc to 1600cc the advance tax rate should be Rs50,000.
In its proposals for auto sector, the OICCI recommended that minimum tax rate should be reduced to 0.2 percent for authorized dealers of local vehicle manufacturers as they have high turnover and low margins.
The OICCI further said that exempt imports made under SRO 655(I)/2006 & SRO 656(I)/2006 from ACD levied vide SRO 1178 (I) 2015 and enhanced vide SROs 630 (I)/2018 and 670 (I)/2019.
Federal Excise Duty (FED) on locally manufactured vehicles should be withdrawn.
Levy of FED on locally manufactured vehicles be withdrawn by deleting the serial no. 55B of Table I of First Schedule to the Federal Excise Act, 2005 as it has resulted in significant increase of sales price of vehicles with consequential reduction in sales volume of the respective vehicle categories.