TAX YEAR 2021: FBR updates tax rates for motor vehicles registration, transfers

TAX YEAR 2021: FBR updates tax rates for motor vehicles registration, transfers

ISLAMABAD: Federal Board of Revenue (FBR) has updated advance tax rates for registration and transfer of motor vehicles during tax year 2021.

The FBR issued the tax rates as updated up to June 30, 2020 and will remain applicable during July 01, 2020 to June 30, 2021, if not amended.

The advance tax on motor vehicles at the time of registration and transfer of registration is governed under Section 231B of Income Tax Ordinance, 2001, which states:

Section 231B. Advance tax on private 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).”

(1A) Every leasing company or a scheduled bank or a non-banking financial institution or an investment bank or a modaraba or a development finance institution, whether shariah compliant or under conventional mode, at the time of leasing of a motor vehicle to a “person whose name is not appearing in the active taxpayers’ list”, either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.

(2) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of transfer of registration or ownership of a private 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 on transfer of vehicle after five year from the date of first registration in Pakistan.

(3) Every manufacturer of a motor “vehicle” shall collect, at the time of sale of a motor car or jeep, advance tax at the rate specified in Division VII of Part IV of the First Schedule from the person to whom such sale is made.

(4) Sub-section (1) shall not apply if a person produces evidence that tax under sub-section (3) in case of a locally manufactured vehicle or tax under section 148 in the case of imported vehicle was collected from the same person in respect of the same vehicle.

(5) The advance tax collected under this section shall be adjustable:

Provided that the provisions of this section shall not be applicable in the case of –

(a) the Federal Government;

(b) a Provincial Government;

(c) a Local Government;

(d) a foreign diplomat; or

(e) a diplomatic mission in Pakistan.

“(6) For the purposes of this section the expression “date of first registration” means—

(a) the date of issuance of broad arrow number in case a vehicle is acquired from the Armed Forces of Pakistan;

(b) the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from a foreign diplomat or a diplomatic mission in Pakistan;

(c) the last day of the year of manufacture in case of acquisition of an unregistered vehicle from the Federal or a Provincial Government; and

(d) in all other cases the date of first registration by the Excise and Taxation Department.

(7) For the purpose of this section “motor vehicle” includes car, jeep, van, sports utility vehicle, pick-up trucks for private use, caravan automobile, limousine, wagon and any other automobile used for private purpose.”

Explanation.— For the removal of doubt, it is clarified that a motor vehicle does not include a rickshaw, motorcycle-rickshaw and any other motor vehicle having engine capacity upto 200cc.

(1) The rate of tax under sub-sections (1) and (3) of section 231B shall be as set out in the following Table:–

S. No.Engine capacityTax
(1)(2)(3)
1.upto 850ccRs. 7,500
2.851cc to 1000ccRs. 15,000
3.1001cc to 1300ccRs. 25,000
4.1301cc to 1600ccRs. 50,000
5.1601cc to 1800ccRs. 75,000
6.1801cc to 2000ccRs. 100,000
7.2001cc to 2500ccRs. 150,000
8.2501cc to 3000ccRs. 200,000
9.Above 3000ccRs. 250,000

(2) The rate of tax under sub-sections (2) of section 231B shall be as follows:–

  S. No.Engine capacityTax
(1)(2)(3)
1.upto 850cc
2.851cc to 1000cc5,000
3.1001cc to 1300cc7,500
4.1301cc to 1600cc12,500
5.1601cc to 1800cc18,750
6.1801cc to 2000cc25,000
7.2001cc to 2500cc37,500
8.2501cc to 3000cc50,000
9.Above 3000cc62,500

Provided that the rate of tax to be collected shall be reduced by 10 percent each year from the date of first registration in Pakistan.

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