Updated Car Withholding Tax for Filers and Non-Filers

Jawad

11 Jul 2024

654

Updated Car Withholding Tax for Filers and Non-Filers

In June 2024, the Pakistani government introduced a significant change in its automotive tax policy, shifting from an engine-based calculation to a value-based approach for withholding tax (WHT) on new local cars . Under this revised policy, the WHT is now calculated as a percentage of the car’s invoice price, aiming to modernize tax assessments in the automotive sector.

Differentiated Tax Rates for Filers and Non-Filers

Unlike the previous system that taxed vehicles based on engine size, the new policy imposes varying rates for filers and non-filers. For instance, filers are subject to a WHT rate of 1% of the car’s value for a 1000cc vehicle, while non-filers face a higher rate of 3%. This adjustment seeks to align tax liabilities more closely with the financial status of taxpayers.

Implementation and Immediate Effects

The policy came into effect on 1st July 2024, immediately impacting consumers and the automotive industry. It also includes provisions for increased WHT percentages on cars exceeding 2000cc, which aims to bolster government revenue but has raised concerns among industry stakeholders about its potential impact on market dynamics.

Industry and Expert Reactions

Industry critics argue that the Pakistani automotive market, already grappling with inflated car prices, may face additional challenges due to the new tax regime. Conversely, some experts support the shift to a value-based taxation system, suggesting it offers a more equitable approach compared to the previous engine-centric model.

Consumer Implications and Vehicle Categories

Consumers across various economic segments will experience the effects differently. For example, purchasing popular models like the Suzuki WagonR VXL will now incur a WHT of 1% for filers (approximately PKR 31,000) and 3% for non-filers (about PKR 102,000). Commercial vehicles such as the Suzuki Ravi are expected to benefit from reduced WHT costs, potentially lowering operational expenses for businesses.

This new tax policy reflects the government’s effort to streamline taxation in the automotive sector while aiming for more transparent revenue collection. However, its full impact on market dynamics and consumer behavior remains to be seen as stakeholders adapt to the changes.

Car withholding tax Filers vs nonfilers tax Car tax update Withholding tax rules Updated tax rates Car ownership tax Tax for car buyers Filing status tax Vehicle tax changes Income tax implications

« PREV POST
PAMA Reports Record Car Sales for June 2024

NEXT POST »
BYD SEALION 6 Hybrid SUV Test Units Arrive in Pakistan

Related Auto News Updates