Advance Tax on Motor Vehicle
Advance Tax on Motor Vehicle: Finance Act 2023 to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws WHEREAS, it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws for the purposes hereinafter appearing;
Previously, fixed amount of withholding tax was required to be collected by the withholding agent under section 231B of the Ordinance at the time of purchase or registration of motor vehicle having engine capacity of 2001cc and above. Through Finance Act, 2023, this fixed amount of tax on motor vehicle having engine capacity of 2001cc and above has been replaced with collection of tax at the rate of 6%, 8% and 10% of the value of motor vehicle having engine capacity of 2001cc to 2500cc, 2501cc to 3000cc and above 3000cc respectively. The aforementioned rates will apply for persons on ATL. In case of non-ATL persons, the rates will be increased by two hundred percent i.e. 18%, 24% and 30% respectively in terms of second proviso to rule 1 of Tenth Schedule to the Ordinance.
The value of the motor vehicle having engine capacity of 2001cc and above for the purpose of collection of withholding tax is provided in the following manner:
(i) Imported vehicle: The import value assessed by the Customs authorities as increased by customs duty, federal excise duty and sales tax payable at import stage.
(ii) Vehicle manufactured or assembled locally in Pakistan: The invoice value inclusive of all duties and taxes.
(iii) Auctioned Vehicle: the auction value inclusive of all duties and taxes.
It has been further provided that where engine capacity is not applicable and the value of vehicle is Rupees five million or more, the rate of tax collectible will be 3% of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.
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