New Withholding Tax On Cars For Filers And Non-Filers

Withholding Tax On Cars

In June 2024, the government proposed a new car tax policy for brand new local cars. Under the revised policy, withholding tax on cars will now be calculated based on their value, i.e., the invoiced price.

Prior to this policy, withholding tax on cars was calculated based on the engine size, but the new policy proposes to calculate it based on a percentage of the car’s value.

Also note that the percentage is different for filers and non-filers in Pakistan. Non-filers will pay a higher percentage of the withholding tax on cars than filers. For example, filers pay 1% of the car value for a 1000cc, while non-filers pay 3% of the car value.

We previously reported on this policy change but only included the tax percentage for filers. Here is the updated table, now including tax rates for non-filers:

New Withholding Tax On Cars

Also read: Revised Car Prices After New Withholding Tax: Budget 2024–25

The government has also increased the WHT percentage for cars above 2000 cc.

Critics say Pakistan’s auto market is already struggling with overpriced cars, and the new tax policy is likely to make the situation worse. However, some car experts argue that the withholding tax on cars value is more reasonable than the car’s engine size.

The policy will increase the amount of tax on both low-budget and high-budget cars, including the Alto, WagonR, and Cultus. Suppose you buy a WagonR VXL. Under the old policy, you would pay PKR 20,000 for WHT tax for distributors and PKR 60,000 for non-filers, but under the new policies, you will pay 1% of the invoice price of the WagonR for distributors and 3% if you are a non-filer, which equates to PKR 31,000 or 102,000 for non-filers.

Commercial vehicles like the Suzuki Ravi will benefit from this policy, i.e., they will pay PKR 9,000 instead of PKR 10,000 for filers or PKR 27,000 instead of PKR 30,000 for non-filers. Visit the official website of excise and taxation for more information.

Let us know in the comments what you think about these revised policies?

Also read: How to Become a Filer in Pakistan – The Guide for Businesses

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