The Federal Board of Revenue (FBR) has announced a significant 200 percent increase in tax rates for individuals who are not on the Active Taxpayers List (ATL) at the time of motor vehicle registration during fiscal year 2023-24 in an effort to broaden the tax net and encourage tax compliance.
FBR updated withholding tax rates
The FBR recently released updated withholding tax rates for the upcoming fiscal year, informing taxpayers of a significant increase in tax rates under Subsections 1 and 3 of Section 231B of the Income Tax Ordinance, 2001.
READ MORE: FBR Chairman Forms Committee to Address Karachi Business Community’s Tax Issues
The following are the revised motor vehicle registration tax rates based on engine capacity and ATL status:
| Serial No. | Engine Capacity | ATL | Non-ATL |
| 1 | Upto 850CC | Rs 10,000 | Rs 30,000 |
| 2 | 851CC to 1000CC | Rs 20,000 | Rs 60,000 |
| 3 | 1001CC to 1300CC | Rs 25,000 | Rs 75,000 |
| 4 | 1301CC to 1600CC | Rs 50,000 | Rs 150,000 |
| 5 | 1601CC to 1800CC | Rs 150,000 | Rs450,000 |
| 6 | 1801CC to 2000CC | Rs 200,000 | Rs 600,000 |
| 7 | 2001CC to 2500CC | 6% of the value | 18% of the value |
| 8 | 2501CC to 3000CC | 8% of the value | 24% of the value |
| 9 | Above 3000CC | 10% of the value | 30% of the value |
The FBR clarified that the value of motor vehicles under serial numbers 7 to 9 in the preceding table will be determined using the following criteria:
(i) For imported vehicles, the value will be the import value as determined by Customs, including customs duty, federal excise duty, and sales tax payable at the time of import.
(ii) The value for vehicles manufactured or assembled in Pakistan will be the invoice value, inclusive of all duties and taxes.
(iii) For auctioned vehicles, the value will be the auction value plus all duties and taxes.
Furthermore, the FBR stated that where engine capacity is not applicable and the vehicle’s value is five million rupees or more, the tax collectible rate shall be 3% of the import value, including customs duty, sales tax, and federal excise duty for imported vehicles, or the invoice value for locally manufactured vehicles.
Senior FBR officials explained that the higher tax rates imposed on non-ATL individuals were intended to encourage tax compliance and bring individuals with taxable income into the tax net.
The FBR aims to increase revenue collection and create a fairer taxation system for all citizens by penalizing those who fail to declare their income and assets and remain outside the tax system.
This change is expected to have far-reaching consequences for individuals looking to register motor vehicles, as it provides a strong incentive for taxpayers to ensure their vehicles appear on the ATL and comply with tax laws during fiscal year 2023-24.
To read our blog on “FBR’s foul tax recovery from IESCO to be investigated by FTO,” click here