ISLAMABAD: Federal Board of Revenue (FBR) has said that income tax collection from new car registration surged by 67 per cent in fiscal year 2021-2022.
The collection of income tax under the same head was Rs11.38 billion in the preceding fiscal year.
Officials in the FBR said that the growth in tax collection from new car registrations was in line with the surge in car sales during the year.
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Pakistan car sales have surged by 54 per cent in fiscal year 2021-2022. The car sales – as reported by Pakistan Auto Manufacturers Association (PAMA) on Friday – increased to 279,267 units in the fiscal year 2021-2022 as compared with 181,397 units in the preceding year.
The rise in sales of domestically manufactured cars was attributed to economic recovery and lower interest rate during the year.
Analysts at Topline Securities said Pakistan car sales (including sales of Non-PAMA members) clocked in at 33k units up by 24 per cent MoM primarily due to resolution of production issues and higher working days as compared to May-2022 due to Eid-ul-Fitr holidays. The same is up by 106 per cent YoY.
This takes FY22 car sales to 279,267 units up by 54 per cent YoY led by economic recovery and low interest rates.
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It is worth mentioning that the automotive industry recorded massive growth during the PTI government. However, since the takeover by the new government in April 2022 the car industry recorded a continuous fall owing to economic challenges.
It is worth mentioning that the tax collection from new car registration was Rs5.88 billion during the fiscal year 2019-2020.
The FBR collects income tax on new car registration under Section 231B of Income Tax Ordinance, 2001.
Following is the text of the Section 231B:
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“Advance tax on motor vehicles.— (1) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of registration of a motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:
Provided that no collection of advance tax under this sub-section shall be made after five years from the date of first registration as specified in clauses (a), (b) and (c) of sub-section (6).”
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Through Finance Act, 2022, the government has revised the advance tax on the new car registration, which is as follow:
| S.No | Engine Capacity | Tax |
| (1) | (2) | (3) |
| 1. | Upto 850 cc | Rs.10,000 |
| 2. | 851cc to 1000cc | Rs.20,000 |
| 3. | 1001cc to 1300cc | Rs.25,000 |
| 4. | 1301cc to 1600cc | Rs.50,000 |
| 5. | 1601cc to 1800cc | Rs.150,000 |
| 6. | 1801cc to 2000cc | Rs.200,000 |
| 7. | 2001cc to 2500cc | Rs.300,000 |
| 8. | 2501cc to 3000cc | Rs.400,000 |
| 9. | Above 3000cc | Rs.500,000 |
The above rates are applicable for the persons appearing on the Active Taxpayers List (ATL). However, this rate shall be enhanced by 100 per cent in case persons are not on the ATL.
