Pakistan massively increases taxation on motor vehicles

Pakistan massively increases taxation on motor vehicles

ISLAMABAD: Pakistan has massively increased the amount of tax on purchase of motor vehicles from July 01, 2022.

The country presented its federal budget 2022/2023 on June 10, 2022 and took various taxation measures to boost revenue collection.

Finance Minister Miftah Ismail while presenting the budget stated that in continuation of our policy to shift the burden of tax on the rich class, advance tax on motor vehicles exceeding 1600cc is proposed to be increased.

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Furthermore, advance tax shall also be collected at the rate of 2 per cent of the value in cases of high value hybrid and electric vehicles. Additionally, the rate of tax for non-filers shall be enhanced to 200 per cent from the current 100 per cent.

Accordingly, the Finance Bill, 2022 proposed the following new rates of advance tax on registration of motor vehicles from July 01, 2022:

S.NoEngine CapacityTax
(1)(2)(3)
1.Upto 850 ccRs.10,000
2.851cc to 1000ccRs.20,000
3.1001cc to 1300ccRs.25,000
4.1301cc to 1600ccRs.50,000
5.1601cc to 1800ccRs.150,000
6.1801cc to 2000ccRs.200,000
7.2001cc to 2500ccRs.300,000
8.2501cc to 3000ccRs.400,000
9.Above 3000ccRs.500,000

According to the Finance Bill, 2022, provided that in cases where engine capacity is not applicable and the value of vehicle is Rupees five million or more, the rate of tax collectible shall be 3% of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.”

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It further said: “Provided that the tax required to be collected under section 231B shall be increased by two hundred percent of the rate specified in First Schedule in case of persons not appearing in the active taxpayers’ list.”

READ MORE: Advance tax on private motor vehicles

The existing rates of advance tax on motor vehicles are (for filers and it will increase by 100 per cent in case of non-filer of income tax returns):

1. upto 850cc: Rs. 7,500

2. 851cc to 1000cc: Rs. 15,000

3. 1001cc to 1300cc: Rs. 25,000

4. 1301cc to 1600cc: Rs. 50,000

5. 1601cc to 1800cc: Rs. 75,000

6. 1801cc to 2000cc: Rs. 100,000

7. 2001cc to 2500cc: Rs. 150,000

8. 2501cc to 3000cc: Rs. 200,000

9. Above 3000cc: Rs. 250,000]

READ MORE: Tax rates on motor vehicles during tax year 2022

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