Karachi, November 27, 2024 – The Federal Board of Revenue (FBR) has reported a significant increase in tax collection from new car registrations, reflecting a 111% surge in the first four months of the fiscal year 2024-25 (July–October).
The Large Taxpayers Office (LTO) Karachi, the major revenue collection arm of the FBR, revealed that Rs 1.11 billion was collected during this period, up from Rs 526 million in the corresponding months of the previous fiscal year.
Factors Behind the Surge
The rise in tax collection is attributed to a robust recovery in Pakistan’s automotive sector, with manufacturing activity and vehicle sales increasing substantially. The Pakistan Auto Manufacturers Association (PAMA) reported a record-breaking 112% Year-on-Year (YoY) growth in car sales in October 2024, with 13,108 units sold, marking a 27% month-on-month (MoM) increase compared to September 2024.
This growth brought total car sales for the first four months of FY25 to 40,693 units, a 50% increase from 27,162 units sold during the same period last year. The sharp rise is fueled by improved consumer confidence, enhanced financing options, and optimism surrounding Pakistan’s economic stability.
Analysts’ Insights
Analysts at Topline Securities Limited highlighted key drivers behind this recovery, including the stabilization of interest rates, the introduction of new car models, and the growing adoption of hybrid electric vehicles (HEVs) and electric vehicles (EVs). With interest rates gradually declining, the market for automobiles is poised for sustained growth.
October 2024 Performance
In October alone, advance tax collection from new car registrations grew by 73% YoY, reaching Rs 335 million, up from Rs 193 million in October 2023.
The positive momentum in the automotive sector signals renewed consumer interest and economic optimism. This surge in sales and tax collection underscores the vital role of the auto industry in Pakistan’s broader economic recovery, providing a much-needed boost to government revenues through direct and indirect channels.
