The Pakistan Business Council (PBC) has proposed a significant increase in advance tax rates on motor vehicle purchases by non-filers of income tax returns for the upcoming 2024-25 budget. This proposal aims to incentivize tax compliance and broaden the tax base.
Key Points:
- Proposed Increase: The PBC recommends a uniform 24% advance tax rate for all non-filers, regardless of engine capacity. This is a substantial increase from the current single-digit percentages.
- Breakdown by Engine Capacity (Current vs. Proposed):
- 2001CC – 2500CC: 6% to 24%
- 2501CC – 3000CC: 8% to 24%
- 3001CC and above: 10% to 24%
- Annual Advance Tax Increase: For non-filers owning vehicles exceeding 2000CC, the annual advance tax would rise from Rs. 20,000 to Rs. 500,000.
Objectives:
- Encourage Tax Compliance: This proposal aims to disincentivize tax evasion among car buyers, especially non-filers.
- Broaden Tax Base: Increase the number of individuals contributing to the tax system.
- Fairer Tax System: Reduce the disparity in tax contributions between filers and non-filers.
Potential Impact:
- Increased Tax Revenue: The government could see a significant rise in tax collection.
- Automotive Industry: The proposal might impact car sales, particularly for high-end vehicles.
- Consumer Behavior: Non-filers may reconsider car purchases or explore filing tax returns.
Looking Ahead:
The PBC’s proposal has sparked debate regarding its economic feasibility and potential consequences. As stakeholders await further discussion on the budget, this recommendation highlights ongoing efforts to reform Pakistan’s tax system and promote fiscal responsibility.
