Withholding tax collection from new car registration declines by 39pc in TY2020

Withholding tax collection from new car registration declines by 39pc in TY2020

ISLAMABAD: The collection of withholding tax on registration of new cars has declined by around 39 percent in tax year 2020 due coronavirus pandemic that has lowered the sales of locally assembled motor vehicles.

According to details released by Federal Board of Revenue (FBR) the collection of withholding tax fell to Rs5.88 billion in tax year 2020 as compared with Rs9.58 billion in the preceding tax year.

The drastic fall in revenue collection has been attributed to lower car sales that were impacted by COVID-19 and slowdown in the economy.

The annual sales of locally assembled cars posed a decline of 53 percent during fiscal year 2019/2020. According to Pakistan Automobile Assemblers Association (PAMA), the total car sales in the country were recorded at 110,583 units during fiscal year 2019/2020 as compared with 235,229 units in the preceding fiscal year.

The provincial motor vehicle registration authorities collect withholding tax on behalf of the FBR. The withholding tax has been collected on the registration of new motor car under Section 231B of the Income Tax Ordinance, 2001.

Following rates of withholding tax under Section 231B:

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]

The above rates are applicable for persons on the Active Taxpayers list (ATL). However, the tax rate shall be enhanced by 100 percent in case person is not on the ATL.

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