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Tax Increase on Cars by Up to 600%

- Views 0 - 03 Jul 2019
In the federal budget of the financial year 2019-20, the federal government has increased the income and withholding tax by 600% on the registration of the vehicles and the vehicle ownership transfer levied on top of token tax. Tax Increase on Cars by Up to 600%.

The one time taxes have been changed by the government to the annual taxes and the vehicle owners will have to pay the additional PKT 3,000 to PKR 200,000 for the filers and PKR 600,000 to 400,000 for the non filers annually. Punjab Excise and Taxation department is going to implement the tax structure but it has asked for written clarification from Federal Board of Revenue FBR and suspect the unintentional error made in the finance bill. The media reports show that the Excise and Taxation Department is concerned with the substantial increase in the taxes.

The local car manufacturers collect the one time withholding tax from the clients and the information is given on their sales invoices but under schedule 231 of finance bill pages 154 and 155 and it has been fixed annually on per seat basis. The complete list of withholding tax on registration and transfer of vehicles is provided here.



The above mentioned table shows the value of tax per seat and we have calculated total tax for each category for 4 seater car, which is given as under:

The government wants to impose income tax with annual token tax of the cars and rates of the cars are also given below:

           Income Tax on Annual Token Tax

Category of Vehicles                       




PKR 1,500

PKR 3,000

2000CC and above

PKR 10,000

PKR 20,000

There can be the intentional error at the time of preparing the finance bill and the Excise and Taxation Department says that the information contained in the financial bill is impractical. If this information is correct then they will start collection of the taxes from 01st July under new rates and the department has upgraded its software in order to accommodate the changes.

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