Tax collection on new car registration surges by 35pc in July-January

KARACHI: The collection of income tax from registration of new motor cars has surged by 35 percent despite restriction imposed on non-filers of income tax returns, sources said on Monday.

The collection of advance tax from new car manufacturing increased to Rs679 million during July-January 2018/19 as compared with Rs503 million in the corresponding period of the last fiscal year.

The tax has been collected from leading car assemblers registered with Large Taxpayers Unit (LTU) Karachi.

The sources attributed the sharp rise in advance tax collection to rise in demand for new cars for online taxi service. They further said that change in law by the new government through Finance (Amendment) Act, 2018 also helped in revenue collection rise.

The previous government imposed restriction on purchase of new cars by non-filers of income tax return by inducting Section 227C to Income Tax Ordinance, 2001.

The government imposed restriction that any application for booking, registration or purchase of a new locally manufactured motor vehicle or for first registration of an imported vehicle should not be accepted or processed by any vehicle registering authority of Excise and Taxation Department or a manufacturer of a motor vehicle respectively, unless the person was a filer.

Through Finance Amendment Act, 2018 the government allowed overseas Pakistani non-filers to get registration of new locally assembled cars.

The sources said that the restriction, however, was not on the transfer of registration of used cars.

The tax authorities were expecting further increase in collection of advance tax from this head after the passage of Finance Supplementary (Second Amendment) Bill, 2019, as some relaxation has been granted to non-filers.

The bill proposed to extend the relaxation to locally manufactured motor vehicles having engine capacity not exceeding 1300cc.