ISLAMABAD, April 10 – Pakistan’s tax authority said on Friday that withholding income tax collected on the registration of new cars rose by more than 71% in fiscal year 2024-25, driven by higher vehicle sales and changes in the tax structure.
The Federal Board of Revenue said collections under the category reached Rs24.77 billion ($89 million) in FY2024-25, compared with Rs14.44 billion in the previous fiscal year, according to its annual report.
Officials attributed the increase to a surge in new car registrations as well as revisions to tax rates during the year. The data showed strong growth across field offices nationwide, reflecting broader economic activity in the automobile sector.
The Large Taxpayers Office (LTO) recorded a significant jump in collections to Rs3.88 billion from Rs1.63 billion a year earlier. Regional offices also reported notable increases.
In Lahore, the Regional Tax Office (RTO) collected Rs3.87 billion, up from Rs1.35 billion, while Islamabad’s RTO reported Rs2.33 billion compared with Rs1.01 billion. Karachi’s RTO-II saw collections rise to Rs1.59 billion from Rs686 million.
Other regional offices also posted gains, with Multan collecting Rs1.19 billion, Sialkot Rs1.17 billion, Rawalpindi Rs1.13 billion, and Faisalabad Rs1.07 billion. LTO Lahore recorded Rs1.07 billion, up from Rs855 million in the previous year.
The withholding tax is collected under Section 231B of Pakistan’s Income Tax Ordinance, 2001, and is applied at the time of vehicle registration.
Analysts say the increase in collections reflects both stronger enforcement and a rebound in consumer demand for automobiles, though rising vehicle prices and regulatory changes have also contributed to higher tax receipts.
The government has been relying on withholding taxes as a key source of revenue amid efforts to meet fiscal targets and manage budget deficits.