How to Calculate Tax on Company-Provided Vehicles?

If your employer provides you with a vehicle for work or personal use, it can impact your taxable income in Pakistan. Here’s a breakdown of how the tax is calculated:

Conveyance Allowance vs. Company Vehicle:

  • This information applies to situations where your employer provides the actual vehicle, not a cash allowance for transportation.

Taxation Based on Usage:

  • Partial Business & Personal Use: If you use the company vehicle for both work and personal purposes, the taxable value is 5% of the vehicle’s cost or lease price at the start of the lease.
  • Solely for Personal Use: When the vehicle is exclusively for personal use, 10% of the vehicle’s cost or lease price at the start of the lease becomes taxable income.

Understanding the Calculations:

  • The taxable amount is added to your regular salary for income tax purposes.
  • This increases your overall taxable income, potentially affecting your tax bracket and the amount of tax owed.

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