Drop in auto registration costing Sindh govt Rs100m daily

KARACHI: Sindh government is losing Rs100 million daily on account of registration and transfer fee because of the new tax regime applicable since February 1.
Earlier, the government was earning Rs120 million revenue per day on this account. Now, registration has declined from 500 vehicles daily to 100 vehicles, whereas transfer vehicles dropped from 1,000 per day to 250, disclosed All Pakistan Motor Dealers Association (APMDA) Chairman HM Shahzad at a press conference, along with other auto dealers, on Wednesday.
It is pertinent to mention here that these taxes were imposed in the budget 2014-2015; however, the government of Sindh implemented this from February 2015.
Shahzad said that under the new tax regime, for vehicles with engine displacement from 650-3000cc, tax filers have to pay Rs10,000-Rs250,000 depending upon the car size. While non-tax filers will pay Rs10,000-Rs450,000.
Another important aspect of the new tax system is that the rate will remain applicable for five years. This means that for a car, which was purchased four years ago, the new buyer when transferring it will have to pay the same. In this way the tax amount is the same as the car price and in some cases even exceeds the cost of the vehicle.
Shahzad said this trend will discourage vehicle registration, as buyers will resist the transfer due to high tax rate, and drive their cars on open letters. It can turn out to be a grave risk with severe consequences, as many unregistered vehicles might get involved in terrorist activities or any other heinous crime, making it difficult for all stake holders.
Pointing out why vehicle registration had reached almost 99 percent over the last few years, Shahzad said that with the help of the government it was made mandatory for the buyers to get the vehicle registered prior to the delivery.
APMDA chairman had asked the government to review its decision, as it will not only increase corruption and lawlessness but also deprive Sindh government of revenues.
In this regard, letters have already been written to all authorities concerned he said, adding that APDMA will continue to approach the government at all platforms to review this decision.
Shahzad said the excise department asked for the income tax letter issued by an income tax officer, which if unavailable costs the consumer an extra Rs4,000 to Rs5,000 for greasing their palms.
This act of the government is forcing the auto dealers to close down their businesses, as buyers are missing from the markets since February, he said.
APMDA has opposed the new regime of advance tax on registration and transfer and said that the imported used cars are already highly taxed. He said that duties on imported used cars were also increased in the last budget and regulatory duty on 1800cc imported used cars also applicable.
He said that no vehicles older than three years are allowed to be imported under transfer, gift, and baggage schemes; however the depreciation is given for only two years. Shahzad said that advance tax on private motor vehicles section 231B read with division VII of part IV of 1st schedule has already increased the price of used cars considerably.
Shahzad further briefed that the effects of substituted provisions
are: Purchase of motor car or jeep from a manufacturer will now attract payment of adjustable advance tax and the obligation of collecting the advance tax has been placed on every manufacturer, where advance tax has not been collected by the manufacturer as stated above or at the time of import of motor vehicle, the motor vehicle registering authority of Excise and Taxation Department at the time of registration of motor vehicle shall collect adjustable advance tax.
In addition, payment of adjustable advance tax will also be attracted at the time of transfer of registration or ownership of private motor vehicle within five years from the date of first registration. The advance registration tax on vehicles with engine capacity of 850cc for a tax filer and non-filer both is Rs10,000.
However, tax regime for automobiles with engine displacement from 851-1000cc is Rs20,000 for filer and Rs25,000 for non-filer; from 1001-1300cc Rs30,000 for tax filer and Rs40,000 for non-filer; 1301-1600cc Rs50,000 and Rs100,000l; 1601-1800cc Rs75,000 and Rs150,000; 1801-2000cc Rs100,000 and Rs200,000; 2001-2500cc Rs150,000 and Rs300,000; 2501-3000cc Rs200,000 and Rs400,000; whereas all vehicles above 3000cc engine capacity will be charged a tax of Rs250,000 for tax filers and Rs450,000 for non payers. On the other hand, income tax will also be charged on the above mentioned vehicles, depending upon the engine capacity – 1000-2000cc will be charged in the range of Rs1,000 to Rs12,000 for tax filers and Rs1,000 to Rs24,000 for non filers.