Islamabad, January 21, 2026 – The Federal Board of Revenue (FBR) has reported a remarkable 51% increase in withholding tax collected from the sale of new cars during the first half of fiscal year 2025-26 (July–December), compared to the same period last year.
Provisional FBR data shows that withholding income tax collections rose to Rs16.67 billion in 1HFY26, up from Rs11 billion in the corresponding period of FY25. Officials linked this surge to strong sales in the automobile sector.
Pakistan’s auto industry recorded a significant recovery in the first six months of FY26, with car sales jumping 46% year-on-year (YoY). A total of 88,322 cars were sold between July and December 2025, compared to 60,676 units in the same period last year. Analysts attribute the growth to easing inflation, lower interest rates, improved consumer sentiment, easier auto financing, and the launch of new car models.
However, withholding tax collections for December 2025 showed a more modest growth of 11%, reaching Rs1.63 billion compared to Rs1.81 billion in December 2024. Experts explained the slowdown as a year-end effect, with buyers postponing vehicle registrations to the new calendar year.
The strong performance in the automobile sector and rising tax collection highlights both a recovery in consumer demand and increased revenue generation for the FBR in FY26.