Pakistan Proposes New Advance Tax System for Motor Vehicles

Pakistan’s government is proposing a significant change to the advance tax system for motor vehicle registration and transfer. Here’s a breakdown of the key points:

Current System:

The existing system levies a fixed advance tax based on the engine capacity of the vehicle (up to 2000 cc). Cars with larger engines have a higher fixed tax rate.

Proposed Changes:

  • Tax Based on Vehicle Value: The new system proposes calculating the advance tax as a percentage of the vehicle’s total value, applicable to all engine capacities.
  • Tiered Rates: The proposed tax rate increases progressively with the vehicle’s value.

Impact on Consumers:

This shift could potentially impact car buyers differently depending on the vehicle’s value and engine capacity. Some may see a decrease, while others may face a higher tax burden.

Comparison Table:

Engine Capacity (cc)Current Advance Tax (PKR)Proposed Advance Tax Rate (%)
Up to 85010,0000.5%
851 – 100020,0001%
1001 – 130025,0001.5%
1301 – 160050,0002%
1601 – 180075,0003%
1801 – 2000100,0005%
2001 – 25006%
2501 – 30008%
Above 300010%

Important Note:

The proposed changes haven’t been finalized yet. It’s recommended to stay updated on official announcements for the latest tax rates before purchasing or transferring a vehicle in Pakistan.

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