The Pakistan Business Council (PBC) has put forth a bold proposal for the upcoming budget of 2024-25, recommending a significant increase in advance tax rates on motor vehicle purchases by non-filers of income tax returns.
Under the proposed scheme, the advance tax rates on motor vehicles across various engine capacities would be substantially elevated from the existing single-digit percentages. Specifically, the PBC suggests a uniform 24% advance tax rate for non-filers across different engine categories:
• Motor vehicles with engine capacity of 2001CC – 2500CC: Proposed increase from 6% to 24%.
• Motor vehicles with engine capacity of 2501CC – 3000CC: Proposed increase from 8% to 24%.
• Motor vehicles with engine capacity of 3001CC and above: Proposed increase from 10% to 24%.
Furthermore, the PBC recommends a staggering increase in the annual advance tax for non-filers owning vehicles of 2000CC and above. The suggested raise would elevate the tax from the current Rs 20,000 to Rs 500,000.
This proposal aims to incentivize tax compliance among vehicle purchasers, particularly those falling under the non-filer category. By imposing a higher advance tax rate, the PBC intends to discourage tax evasion and promote greater transparency in financial transactions related to motor vehicle acquisitions.
The rationale behind the proposal underscores the imperative of broadening the tax base and enhancing revenue generation for the government. Additionally, it seeks to address the disparity in tax contributions between filers and non-filers, thereby fostering a more equitable tax regime.
The proposed measures, if implemented, could potentially have significant implications for the automotive industry and consumer behavior in Pakistan. While aimed at bolstering tax compliance, the proposal is likely to spark debates and discussions regarding its economic impact and feasibility.
As stakeholders await further deliberation on the proposed budgetary measures, the PBC’s recommendation underscores the ongoing efforts to reform Pakistan’s taxation system and promote fiscal discipline in the country.