Withholding Tax on Vehicle Registration and Transfer

withholding tax on vehcile registration

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

What are the functions of FBR?

federal board of revenue

Federal Board of Revenue (FBR), formerly known as Central Board of Revenue (CBR) was formed on April 1, 1924, with the enactment Central Board of Revenue  Act of 1924. The Federal Board of Revenue (FBR) is a special government association of Pakistan to investigate money laundering and tax evasion crimes. The FBR works with all individuals and organizations to strengthen tax assessment in the nation.


The FBR perform special duties for FBR headquarters through tax inspectors who monitor tax evaders. The FBR also collects tax evasion intelligence and manages tax laws for the government of Pakistan and acts as Pakistan’s central agency of collection of revenue.

Mission of FBR

Federal Board of Revenue’s mission is to increase the capacity of the tax system through modern techniques by providing taxpayer guidelines, support, and the ability to pay taxes through a motivated, devoted, satisfied, and professional workforce.

Also Read: What is Value Added Tax

Functions of FBR

The FBR is a semi-autonomous federal agency of Pakistan responsible for enforcing financial laws and collecting taxes for the Government of Pakistan. Provides approval for appeal/reference before High Courts and CPL / review before the Supreme Court and approval for litigation in courts. The responsibilities of FBR are:

  • Formulating and managing fiscal policies.
  • Federal duties and collection of revenues, taxes and other levies,
  • Intentional court work in deciding tax cases and appeals

FBR basically works through its main collection branches across the country involving Regional Tax Offices (RTOs) and Large Taxpayer Units (LTUs). To perform functions accurately on the basis of different duties FBR consist of following wings:

  S.No.
FBR Wings
01 Inland Revenue
02 Customs
03 Admin
04 Taxpayers Audit
05 Legal
06 Facilitate and Taxpayer Education (Fate)
07 Strategic Planning Reforms &Statistics(SPR&S)
08 Human Resource Management (HRM)
09 Information Technology
10 Accounting
11 Legal and Accounting – Customs

FBR Wing has responsibilities and functions according to their specifications. Rather than other wings there are two major wings of FBR with major function

A) The Inland Revenue
The Inland Revenue Service (formerly known as the Income Tax Department) levies domestic taxes, including Income Tax, Sales tax and Federal excise duty, and is a central component of the FBR.

B) The Custom
The Pakistan Customs Service directs import obligations and various taxes levied at the import stage, also manages international trade and manages the limits and restrictions imposed by government legislation.

For the purpose of tax collection and prosecution of tax evaders, the powers and functions of the FBR include yet are not restricted to:

  • Investigating and auditing tax matters,

  •  Arrest warrants, with attachments.

  • Also, the public auction of movable and immovable assets was non-compliant.



Budget 2020-21 Highlights

Here are budget 2020-21 highlights:

1- No new tax to give relief to people
2- Ahsas program to continue by increased budget
3- To improve tax collection
4- To decrease in govt. expenditure
5- To improve subsidy system
6- Poverty elevation program
7- Higher education budget increased
8- Measures taken to improve remittances
9- Kamyab Naujawan program budget introduced
10- To improve public services through E-governance
11- Artist welfare fund increase
12- Inflation to be decrease
13- FBI increase by 25%
14- To improve health services by ICT
15- To open smart schools
TAXES :
16- POS of retailer business to increase
17- 14% to 12% sales tax on retailers
18- Hotel minimum tax decrease to 0.5% July to September
19- Fixed tax scheme introduced for Small and medium businesses
20- Export rebate, to direct transfer in business bank accounts
21- Raw Material fully exempt from custom duty to respective nature of businesses having 20000 items
22- Custom duty of 200 items in tariff line decrease
23- PRD to decrease
24- Poor people benefits — corona—supplements etc to be exempted from duties and taxes
25- Custom official powers has been decreased
26- Inclusive of advance ruling methods in custom law
27- Unregistered sales tax person—CNIC condition from 50 thousand to one lakh
28- Covid 19 sales items exemption period increased
29- 237 sro for relief extended for further 3 months
30- 11th schedule of sales tax to improve
31- Increase in FED in all type of cigarettes and its articles increased to 100%
32- Caffine items FED from 13 to 25%
33- Double pick up FED to be taxed as other vehicles
34- 17% sales tax on potassium cholaride decrease

35- 14% sales tax decrease to 12% of big retailers
36- Wastage to fixed in manufacturing business
37- 12 schedule sales tax of VAT—manufacturers no sales tax
38- Cement sector decrease from 2 to 1.75 per kilo
39- If Appeal than reference can be made to following years
40- ADRC law to be change
41- STAY provision to be made in ADRC
42- FED law to be enhanced
43- Sales tax act 9th schedule mobile phone manufacture decrease in sales tax
44- E Audit / video link introduced for audit
45- Online sharing of assess data introduced
46- WHT Regime to delete 9 sectors (Education and marriage hall etc)
47- Commercial importer and manufacturer importing on raw material and machinery from 5.5 top 2% and 1%
48- Machinery examination certificate abolished
49- Aop and individual allowed expenditure to be claimed against property Income
50- Foreign remittances transfer from one bank to another – no tax on that
51- Tax Refund procedure – now changed – one centralized system introduced
52- 152 WHT of non resident for Hajj Companies
53- Advance tax abolished under section 231b and 234 on rickshaw and cars
54- Advance tax payment threshold increased
55- Exemption certificate through automation system
56- Schedule 12 Exemption certificate for advance tax to be produced by person who had already paid advance tax
57- RIET residential properties CGT period extended
58- Free Zone benefits also to be given modern developers
59- To simple law and business only for PE tax deduction to be made
60- Tax deduction under section 235 now fully adjustable
61- Inclusion in Active tax payer list, proper enquiry to be conducted
62- Automatic return process system to be introduce for any error in return if any
63- For and increase in data base and WHT 236V to be introduce
64- Non resident and resident tax should be same
65- Purchase and leased vehicle threshold to be same
66- Depreciation to be as per best international practice
67- NPO status per 2nd schedule section 100C condition to be strictly followed and only those NPO be there who benefits the community in general
68- 10% tax to be paid while filing appeal
69- Auto system advance tax to introduce through IRIS by 5th of every advance tax due date
70- CGT on Immoveable property decrease from 5 years to 4 years
71- Non Resident- royalty, fees etc to be decrease

72- FTR to be filed with section 114
73- Appeal fees increased
74- Section 165 WHT for bio annual now to be filed by 3 months instead of 6 months
75- Immoveable taxation CGT from 8 to 4 years and every year decrease by 25%

Further refer to salient features and brief of budget.
Courtesy :
Adnan Saeed Advocate High Court
A S Law Associates

Documenting economy: FBR urged to use data of bourse, the property market

Pakistan Business Council (PBC) has asked the Federal Board of Revenue (FBR) to use stock market/property data and the National Database and Registration Authority (Nadra) information for documenting the economy and providing a level-playing field to the domestic manufacturing from the next fiscal year.

According to the budget proposals of the PBC for 2020-21, the FBR has got access to financial data in various forms including the monthly statements submitted by withholding tax agents of the various withholding deductions made by them.

This can be a start to bringing new taxpayers in the net.

In addition, the FBR has also collected data about tax paid by non-filers on property and on gains made in the stock market.

The information as per statement filed under Section 165A and the NADRA records are also available.

This can be a start to bringing new taxpayers in the net, the PBC added.

The number of taxpayers needs to be increased; the narrow taxpayer base is leading to greater pressure on the existing taxpayers.

An increase in the tax base will reduce the FBR’s ever increasing reliance on existing taxpayers, it proposed.

The monthly sales declared by commercial importers should be matched with sales declared in annual income tax return as well as the credit entries in all business bank accounts.

In case of any discrepancy, reconciliation with justifiable reasons should be submitted by the commercial importers.

Online CREST system must be amended in a way to trace sales along with value addition, thereon of person to whom supplies were made by the commercial importers.

The PBC has proposed that the concept of separate withholding tax rates for filers and non-filers was introduced as a measure for increasing documentation of the economy.

Though large amounts are being collected from non-filers, no effort has been made to increase the tax base.

Non-filers for the most part have built the cost of this government levy into pricing and passed it on to their customers.

The withholding tax regime should be simplified by reducing the number of rates significantly.

The current withholding tax guide available on the FBR website is a 76-page document, clearly shows the complexity of the regime from compliance and ease of doing business.

There needs to be a significant distinction in the withholding income tax rates charged from non-filers vs the rates for filers.

Across the board, massive under-invoicing and dumping of imported products have been increasing.

Information regarding values at which various custom check posts clear import consignments is not publicly available.

This encourages unscrupulous importers to under-declare the value of consignments to evade government revenues, it proposed.

In order to broaden the tax base and to achieve an increase in overall tax collection without burdening existing taxpayers, the policy to increase the tax on non-filers/unregistered persons should be implemented specifically in the following cases:

a) unregistered industrial/commercial entities (not having STRN) having bill amount in excess of Rs20,000 per month, extra sales tax should be increased from five percent to 20 percent.

b) After collection of extra tax as referred above for a continuous period of six months, all these connections should be provisionally converted into NTN and STRNs and return filings from these connections should be enforced.

c) In case of provisional registration as above, utility companies be directed to issue show cause notices where annual billing amount exceeds Rs2.4 million and directing provisionally registered persons to obtain permanent registration.

In case of non-compliance, utility companies be directed to disconnect utility connections.

d) Moreover, in order to bring all commercial/industrial users in the tax net and to verify filer status, electric distribution companies should provide one year to all such consumers to get their NTN registered with electricity distribution companies.

In case of failure to provide NTN, electricity connection should be disconnected.

Considering the fact that all industrial/commercial connections will be linked with the NTN, the tax department will then be in a better position to assess the electricity consumed by commercial/industrial users and corroborate the same with amount of sales/production etc. reported in sales tax/income tax return.

e) In order to bring all commercial/industrial users in the tax net and to verify filer status, electric distribution companies should provide one year to all such consumers to get their NTN registered with them.

Thereafter, such commercial/industrial consumers without NTN should be charged advance income tax at 30 percent (from existing 12 percent) on their utility bills.

Those with NTN but non-filer status be charged at 20 percent WHT.

f) Residential consumers be made liable to provide NTN in case electricity bill amount exceeds Rs1.2 million per year or levy advance income tax withholding of 20 percent.

g) All exemptions (like exemption on agricultural income) under the Income Tax Law should only be made available to filers, so that exempt income is also reported and wealth is reconciled.

h) Withholding tax on international business class tickets under Section 236L is same Rs16,000 for filer and non-filer, it should be increased to Rs50,000 for non-filers.

i) Withholding tax at five percent or Rs20,000, whichever is higher, is applicable under Section 236D on all functions organized by filers as well as non-filers. Rate of withholding be increased for non-filers to Rs100,000 as minimum and no WHT from the filer, PBS added.

News Sources: https://www.brecorder.com/2020/05/28/600647/documenting-economy-fbr-urged-to-use-data-of-bourse-property-market/

How to pay Income tax?

how to pay income tax

If you are a filer or taxpayer and want to pay income tax, you can pay it either online or manually. Please see the payment methods:

Factors of Income Tax Calculation:

Calculating income tax depends on various factors that contain your status whether you are an individual, a company, a firm or a local authority, The amount of your income and its nature, and your age.

Heads of Income:

According to Income Tax Ordinance, 2001, taxable income is divided into five categories:

Salary

Business

Capital Gains

Income from Property

Income from Other Sources

Benefits of Paying Income Tax:

Paying your tax returns and wealth statements is good for your government as well as for you to get filer benefits to enjoy a minimum withholding tax on all of your services at excise offices, airports, banking transactions, in purchasing new cars and for real-estate matters. Earlier, the FBR had separate portals for companies and individuals. But now, they’ve made it easier for everyone.

Online Tax Payment

Steps for FBR E-Enrollment:
Here are the ways for FBR E-Enrollment to start paying your income tax: 

  • Get yourself register with FBR and start paying your tax returns online.
  • For unregistered person go to FBR IRIS portal provide all relevant information by clicking on the registration tab
  • For different options again open the IRIS portal and click on e-enrollment.
  • To complete the registration process, enter all the asked details like your mobile number, CNIC, etc.
  • Login into your account and fill the form by entering all your income information.
  • Now you are a Tax Filer.
  • In order to check that you are on active taxpayer list or not type ATL give space then enter 13-digit CNIC number and send SMS it to 9966.

Guidelines to Pay Income Tax:

Once, you become tax filer you need to pay your income tax by following these steps:

  • First of all, log into e-file
  • Click on the e-Payments tab.
  • Then, go to Create Payment, select Income Tax Annual Return option.

Creating Payment Slip:

  • Selection of related tax year
  • Entering the Tax amount due
  • Selecting a payment mode
  • Clicking on create a button and confirm the e-payment created.
  • Select the nearest city branch of State Bank (SBP)or National Bank (NBP) for payment slip deposit. (you can download the PSID by printing it)
  • After the payment of due tax, the COMPUTERIZED PAYMENT RECEIPT (CPR)is generated. It is reflected in Iris within 24 hours of payment being submitted

Manually Tax Payment:

If you can’t go online and pay taxes then you can manually submit your statements on paper at the Taxpayer Facility Counters of the relevant regional tax office.

However, if you want to pay your income tax but you are not a filer, then check the relevant blog ‘How to become filer‘.

Late Tax Payment Penalty:

Failure to pay your taxes is punishable by a fine or a penalty of one year or two in prison.

How to apply for NTN number online?

Other than apply for NTN manually, you can apply for NTN number online through the FBR official website by following steps given below:

Online Procedure:

apply for NTN online

Step 1: First of all, you need to go to the website: https://e.fbr.gov.pk in order to apply for your NTN number.

Step 2: Here you will see the ‘e-Registration’ tab. All you need to do is select a new e-registration in order to start with a new application.

Step 3: In this step, you need to select the type of application according to your requirements.

Step 4: After that, select the taxpayer type (Individual, AOP, or Company).

Step 5: Here you will have to Enter the CNIC / Reg. Inc according to the type of selected taxpayer, Name and image character then click Ok in order to continue the process.

Step 6: Now you will see the already selected category on the next screen.

Step 7: Once completing the online registration form, verify it and submit that application if you want to apply online. To process from TFC, you need to submit the application at the TFC counter along with your all required documents.

Step8: A Token number will be assigned to that application for further processing/ approval/inquiry. After login, go to the Registration=> Enrollment=> Change profile and update the information accordingly. Moreover, if you want to apply for NTN number manually other than applying for NTN number online, follow the steps:

Manual Procedure:

Step 1: Download the taxpayer registration form by clicking here.

Step 2: After filling the form, submit it to concern NTN Cell/RTO.

Recommended Blogs:
How to become Filer
Check NTN number

How to become a Filer in Pakistan?

how to become filer

If you are the citizen of Pakistan, it is your duty to pay your tax. To become a filer in Pakistan, you must simply follow the procedure explained below:

  • NTN number can be obtained by visiting your legal adviser or by visiting FBR website and making a request. For this purpose, go to the site and then go to the Registration for Unregistered Person tab. Fill the form as it is a simple form. After filling it, it will generate your NTN number.
  • NTN number takes a few hours and you will get a unique NTN number at your disposal but now the government is working on converting your National CNIC as your NTN number.
  • IRIS RegistrationGo to the federal board of the Revenue website and then go to the IRIS tab. Register yourself to e-enrollment.
  • Once you got registered, you will receive a confirmation email.
  • Fill in the income details required. You need to have all the relevant tax content available.
  • Once you submit all the details, IRIS will confirm that you have now submitted it.
  • After successful submission, you will receive a confirmation email. Later you will be active on the ATL listing.
  • You can also validate it through logging in and entering your NTN or CNIC.

By following these steps, you can become a filer. Moreover, being a filer also gives you different advantages. So, please see the filer benefits.