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Withholding tax up to Rs200,000 imposed on sale of new car within 90 days

Automotive, Taxation

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed up to Rs200,000 as withholding tax on sale of motor cars within 90 days of first registration, sources said on Monday.

The withholding tax has been imposed till June 30, 2021. The revenue generation measure has been taken in order to discourage the trend of ‘on money’.

Following withholding income tax rates have been imposed on motor vehicles:

01. Tax rate at Rs50,000 has been imposed on sale of up to 1000CC motor vehicles.

02. Tax rate at Rs100,000 has been imposed on sale of motor vehicles between 1000CC and 2000CC.

03. Tax rate up to Rs200,000 has been imposed on motor vehicles with engine capacity of 2000CC and above.

In order to apply the rates an amendment to Section 231B of Income Tax Ordinance, 2001 has been made.

Following is the text of the amendment:

“Every motor vehicle registration authority of Excise and Taxation Department shall collect advance tax from the buyers of locally manufactured motor vehicles who subsequently sell it within ninety days of delivery of such vehicle whether prior to or after registration.”

The FBR said that no collection of the withholding tax under the new amendment would be made after June 30, 2021.


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