Archive August 2020

Federal  Board of Revenue (FBR) has recently updated the Withholding tax rates on any vehicle registration and for transfer of vehicles for the year 2020-21 from 30th of june, 2020.

Withholding tax under Section 231B:

The withholding tax rate under  section 231B for private vehicles is that withholding tax shall be collected by vehicle registration authority when purchasing newly manufactured vehicle at that time when vehicle is transferred to the person  who is purchasing the vehicle.

For the person not appearing on Active Taxpayer  List (ATL) , the withholding tax shall be increased to 100% for that person.

Here is the list of Withholding tax rates under the Section 231B:

Engine Capacity	For ATL	For Non-ATL
Up to 850CC	Rs7,500	Rs15,000
851CC to 1000CC	Rs15,000	Rs30,000
1001CC to 1300CC	Rs25,000	Rs50,000
1301CC to 1600CC	Rs50,000	Rs100,000
1601CC to 1800CC	Rs75,000	Rs150,000
1801CC to 2000CC	Rs100,000	Rs200,000
2001CC to 2500CC	Rs150,000	Rs300,000
2501CC to 3000CC	Rs200,000	Rs400,000
Above 3000CC	Rs250,000	Rs500,000

Also Check: Vehicle Verification in Pakistan

Withholding tax rates under Section 231B (2):

According to Section 231B(2), Vehicle Registration Authority will collect withholding tax from the person who is transferring his ownership/registration when vehicle is being transferred.

The withholding tax rate under this section shall be as:

Engine Capacity	For ATL	For Non-ATL
Up to 850CC	Rs0	Rs0
851CC to 1000CC	Rs5,000	Rs10,000
1001CC to 1300CC	Rs7,500	Rs15,000
1301CC to 1600CC	Rs12,500	Rs25,000
1601CC to 1800CC	Rs18,750	Rs37,500
1801CC to 2000CC	Rs25,000	Rs50,000
2001CC to 2500CC	Rs37,500	Rs75,000
2501CC to 3000CC	Rs50,000	Rs100,000
Above 3000CC	Rs62,500	Rs125,000

Withholding tax rates under Section 231B (3):

When a person is purchasing vehicle, withholding tax shall be collected by manufacturer of vehicle at the time of sale of vehicle. Withholding tax shall be adjustable to tax liability.

Under Division VII, Part IV of First Schedule of the Income Tax Ordinance, 200, withholding tax rates are as:

Engine Capacity	For ATL	For Non-ATL
Up to 850CC	Rs7,500	Rs15,000
851CC to 1000CC	Rs15,000	Rs30,000
1001CC to 1300CC	Rs25,000	Rs50,000
1301CC to 1600CC	Rs50,000	Rs100,000
1601CC to 1800CC	Rs75,000	Rs150,000
1801CC to 2000CC	Rs100,000	Rs200,000
2001CC to 2500CC	Rs150,000	Rs300,000
2501CC to 3000CC	Rs200,000	Rs400,000
Above 3000CC	Rs250,000	Rs500,000

The Government of Pakistan has provided citizens an online system for vehicle verification in Pakistan for all type of vehicles (cars/motors) with computerized registration plates. If a person wants to purchase a new vehicle, he can check all details of that vehicle through this online vehicle verification system. This system is introduced because if you are looking to buy or purchase a new vehicle, you need to verify all vehicles details first.

In order to check vehicle verification, follow these steps:

1. First, go to MTMIS.
2. Here you will see the page of Vehicle Verification. All you need to do is enter the registration number of your desired vehicle, click on Search and you will see all information of that vehicle like make model of vehicle, color of that vehicle chassis number, type of vehicle and name of the owner of that vehicle.

Also Check: Income Tax Rates in Pakistan

The government of Pakistan also warned not to get into buying a stolen, non-costumed paid or tampered vehicle as it might result ending into court or jail.

Vehicle verification for KPK: http://balochistan.gov.pk/departments/excise-and-taxation/

Vehicle verification for Sindh: http://www.excise.gos.pk/vehicle/vehicle_search

Vehicle verification for Balochistan: http://balochistan.gov.pk/departments/excise-and-taxation/

You can get more details related to vehicle verification in Pakistan by visiting: https://cpomul.punjabpolice.gov.pk/

1- Purpose of Dedicated Division Formation

Existing Structure:
FBR has a complex mechanism for exporters/business/trader facilitation, which is difficult for average user with limited technical capacity. Following systems are in place in FBR: IRIS, E-File Taxpayer Facilitation Portal, IRIS-ADX Application, Centralized Sales Tax & FED Assessment & Processing (CSTAP), Pay-Sys, Risk Management System (RMS), Sales Tax Return Automation System, WEBOC, One Customs Software.

Proposed Solution:
In addition to the existing structure which is not only confusing but non user-friendly as well, there are numerous issues faced by trader/business from initial registration to becoming a taxpayer with FBR. There is a need to establish a dedicated division to:

a) Facilitate the existing taxpayers largely paying 70% of the taxes per annum;
b) Support the foreign prospect companies to be registered in Pakistan to initiate new projects either through joint ventures or establishing their own existence

The proposed division will be reporting to Chairman FBR with user-friendly software and direct & easy communication for clients. The division will have:

a) Competent & suitable HR to be hired from the Market
b) Dedicated and user-friendly web portal having limited to no human interface
c) Digital walk-through for international companies for easy registration process in Pakistan d) Simplifications of procedures and forms
e) Random auditing mechanism through automated system.
f) FBR existing divisions of ‘Integrity Management Cell’ (IMC) for facilitation of taxpayers and unit named ‘Tax Information Processing Unit’ (TIPU) will also be integrated within this division.

2- Operating and maintenance cost

This division will be operating as an integral part of FBR for facilitation of large taxpayers/business. Since a certain percentage of FBR work will be undertaken by this division so FBR needs to allocate annual operating budget for this division, covering salaries of HR, maintenance, hosting and upgrading of software, connectivity, training and facilitation budget, communication and other operational expenses. The same audit requirements would be applicable on this division which is applicable for FBR.

With this new division having HR from the private sector, the employee retention may be an issue for FBR, keeping in view limited vertical growth and restricted remuneration packages under Finance Division for contractual employees. FBR may need to look into this issue and undertake legal amendments in its Act in order to establish this division as a sustainable model.