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Withholding Tax On Motor Vehicle Registration

The FBR (Federal Board of Revenue) has amended tax rates on motor vehicle registration applicable during the tax year 2021 (July 01, 2020, to June 30, 2021). Similarly, Income Tax Ordinance, 2001 (updated June 30, 2020) after amendments added through Finance Act, 2020. This article describes benefits being a filer in respect of Withholding Tax On Motor Vehicle Registration and vehicle transfer fee. The FBR has ruled the tax on the motor vehicle at the time of registration, under section 231, as follow:

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Private motor vehicles u/s 231B (1)

Advance Tax on Private motor vehicles, u/s 231B (1), shall be deducted. When registration of a motor vehicle made by the motor vehicle registering authority of the Excise and Taxation Department. At the rates specified:

Besides, no collection of advance tax under this subsection shall be made after five years from the first registration date or as specified in the following clauses.

  1. In case a vehicle is acquired from the Armed Forces of Pakistan. Then the date of issuance of broad arrow number.
  2. In case the vehicle purchased from a foreign diplomat or a diplomatic mission in Pakistan. Then the date of registration by the Ministry of Foreign Affairs
  3. In case of acquisition of an unregistered vehicle from the Federal or Provincial Government. The last day of the year of manufacture. Motor vehicle registration fee included withholding tax applies within following slabs.
Engine Capacity Filer Non-Filer
Up to 850cc PKR 7,500/- PKR 15,000/-
851cc to 1000cc PKR 15,000/- PKR 30,000/-
1001cc to 1300cc PKR 25,000/- PKR 50,000/-
1301cc to 1600cc PKR 50,000/- PKR 100,000/-
1601cc to 1800cc PKR 75,000/- PKR 150,000/-
1801cc to 2000cc PKR100,000/- PKR200,000/-
2001cc to 2500cc PKR150,000/- PKR300,000/-
2501cc to 3000cc PKR200,000/- PKR400,000/-
Above 3000cc PKR250,000/- PKR500,000
Withholding Tax Table On Motor Vehicle Registration

Leasing of Motor vehicle u/s 231B (1A)

Leasing of Motor vehicle, u/s 231B (1A), to such individual whose name is not appearing in the active taxpayers list. By any Leasing Company, Scheduled Bank, Investment Bank Development Finance Institution Non-Banking Finance Institution MODARBA (Sharia compliant or under conventional mode) shall deduct advance tax at the rate of 4% of the value of the motor vehicle.

Transfer of ownership of motor vehicle u/s 231B (2)

Vehicle Transfer or ownership of the motor vehicle, u/s 231B (2), by every motor vehicle registering authority of Excise and Taxation Department shall collect withholding tax, at the rates specified.

Equally important, that no collection or charge in a vehicle transfer fee of advance tax under this subsection shall be made on transfer of vehicle after five year from the date of first registration in Pakistan.

Engine Capacity Filer Non-Filer
Up to 850cc PKR. 0/- PKR. 0/-
851cc to 1000cc PKR. 5,000/- PKR. 10,000/-
1001cc to 1300cc PKR. 7,500/- PKR. 15,000/-
1301c to 1600cc PKR. 12,500/- PKR. 25,000/-
1601cc to 1800cc PKR. 18,750/- PKR. 37,500/-
1801cc to 2000cc PKR. 25,000/- PKR. 50,000/-
2001cc to 2500cc PKR. 37,500/- PKR. 75,000/-
2501cc to 3000cc PKR.50,000/- PKR.100,000/-
Above 3000cc PKR.62,500/- PKR.125,000/-
Motor vehicle transfer fee

Every manufacturer of a motor vehicle, u/s 231B (3) shall deduct/collect advance tax at the rate specified in Division VII of Part IV of the First Schedule. From the person to whom such sale is made, at the time of sale of a motor car or jeep.

Section 231B (1) shall not apply if a person produces sufficient evidence that tax under section 231B (3) in case of a locally manufactured vehicle. Likewise, imported vehicles which tax has been collected under section 148 from the same person.

The advance tax deducted/collected under this section shall be adjustable: Equally important that the provisions of this section shall not be applicable in the case of –

  1. The Federal Government;
  2. A Provincial Government;
  3. A Local Government;
  4. A foreign diplomat; or
  5. A diplomatic mission in Pakistan.

This section’s vital “motor vehicle” includes car, jeep, van, sports utility vehicle, pick-up trucks for private use, caravan automobile, limousine, wagon, and any other automobile used for private purpose, excluding rickshaw and motorcycle.

Peoples in develop Societies pay taxes. You should also read the Benefits for Filler section articles which describe well about the benefits being a responsible resident of Pakistan