Karachi, February 11, 2025 – A massive increase of 85% was recorded in car buying during the month of January 2025, driven by fears of impending restrictions on non-filers of income tax returns.
According to official data, car sales for vehicles with an engine capacity of 1300CC and above surged to 5,518 units in January 2025, compared to 2,977 units in December 2024. Similarly, sales of cars with an engine capacity of 1000CC rose by 32%, reaching 717 units in January 2025, up from 542 units in December 2024.
The surge in car purchases is largely attributed to the government’s proposal to enforce strict measures on non-filers. On December 18, 2024, the government tabled a tax bill in parliament, seeking approval to impose restrictions on non-filers regarding the purchase of motor vehicles and other high-value economic transactions. Currently, the bill remains under consideration in the National Assembly.
The proposed restrictions have caused concern among non-filers, prompting a rush to finalize transactions before the bill becomes law. A similar pattern was observed in cash withdrawals, as non-filers hurried to withdraw funds ahead of the anticipated enforcement. Banks across Pakistan reported a massive withdrawal of Rs 862 billion during December 2024, reflecting the anxiety among those who have not yet complied with tax regulations. Although the State Bank of Pakistan (SBP) has not yet released data for January 2025, experts predict a continued rise in withdrawals.
Interestingly, the spike in car buying is most notable in vehicle categories where higher withholding tax rates are applicable. According to the withholding tax card issued by the Federal Board of Revenue (FBR), no withholding tax is applied on the purchase of cars up to 850CC. However, for vehicles exceeding this capacity, withholding tax for non-filers is 200% higher than that for individuals listed on the Active Taxpayers List (ATL).
If the proposed bill is passed, non-filers may face significant hurdles in acquiring new cars and conducting other financial transactions. The government’s push to bring more individuals into the tax net has sparked debate, with critics arguing that non-filers should be given more time to comply. On the other hand, tax authorities maintain that discouraging non-filers is essential for boosting revenue and ensuring fair tax collection.