Amid pressure, govt backpedals on vehicle tax regime

Doubles income and withholding tax on vehicle ownership only for non-filers

Rizwan Asif July 02, 2019

LAHORE: Following pressure from the public and the provinces, the federal government has decided to stick with the existing tax regime for vehicle ownership, doubling the levies solely for non-filers.

According to sources, the Federal Board of Revenue (FBR) decided to walk back the proposed regime after all provincial governments voiced their reservations. In particular, the Punjab excise secretary had a ‘detailed conversation’ with the FBR chairman on the matter, they said.

The government, in the Finance Bill 2019-20 tabled last month, announced a drastic 400% increase in income and withholding tax to be collected at the time of new vehicle registration, transfer of vehicle ownership, and with token tax.

It also decided to change the former ‘one-time’ taxes to annual levies based on the number of seats in a given vehicle, which have placed an additional yearly burden of Rs3,000 to Rs200,000 on vehicle owners who paid the token tax and Rs6,000 to Rs400,000 on non-filers. Earlier, companies that manufactured cars locally used to collect a one-time withholding tax from the buyer and would write down the details on customers’ sales invoices.

The impractical nature of the tax schedule had also puzzled the Punjab Excise and Taxation Department which – suspecting an inadvertent error in the finance bill – had sought a written clarification from the FBR. The schedule had a knock-on effect on the tax collection software, leading to all four provinces temporarily halting collection amid widespread confusion among vehicle owners.

That error has now been clarified, sources said, adding that it was caused by an

Sources said the error was caused by an ‘unintentional’ mistake on the part of FBR officials finalising the tax schedule in preparation for the Finance Bill. Collection is now set to resume from today as all provincial excise departments upgraded the software accordingly on Tuesday.

Talking to The Express Tribune, Punjab Excise Minister Hafiz Mumtaz Ahmed said the Pakistan Tehreek-e-Insaf government places great priority on providing relief to the public.  “There was some mistake at the time the Finance Bill was being prepared. We pointed it out too and senior FBR officials had noticed as well. It is now rectified and the previous tax regime has been restored, although taxes have been doubled for non-filers,” he said.


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