Bad news as the government has recently increased the advance income tax on vehicles with engine capacities above 2000cc in the amended Finance Bill 2023. The new rules apply to both imported and locally manufactured vehicles with engine capacities ranging from 2001cc to above 3000cc.
Here’s a breakdown of the new tax rates based on engine capacity:
- Vehicles with engine capacities between 2001cc and 2500cc will now face a fixed tax rate of 6%.
- For vehicles with engine capacities between 2501cc and 3000cc, the fixed tax rate has been set at 8%.
- Vehicles with engine capacities above 3000cc will face a fixed tax rate of 10%.
According to Section 231B of the Income Tax Ordinance 2001, advance tax will be collected on motor vehicles. This tax will be collected by the motor vehicle registering authority of the Excise and Taxation Department at the time of vehicle registration or transfer of ownership.
However, it’s important to note that no advance tax will be collected on the transfer of a vehicle after five years from its initial registration in Pakistan.
In the case of locally manufactured vehicles, if a vehicle is sold before registration by the person who originally purchased it from the manufacturer, the motor vehicle registering authority will collect tax at the specified rates during registration. Additionally, manufacturers of motor vehicles must collect advance tax at the specified rate from the buyer at the time of sale for motor cars or jeeps.
These changes aim to adjust the tax rates on vehicles based on their engine capacities and ensure that the appropriate taxes are collected during the registration and transfer processes.
List of cars in Pakistan with 2001 cc and Above Engine Capacity
Here is the list of cars that will be impacted by this tax amendment.
- Toyota Land Cruiser Prado
- Toyota Coaster
- Hyundai Staria
- KIA Grand Carnival
- KIA Sorento
- Toyota Hilux Revo
- Toyota Fortuner
- Hyundai Porter
- Isuzu D-Max
- Hyundai Sonata (2.5)
- Toyota Camry
- Toyota Hilux
- Hyundai Santa Fe
Good news for those considering the purchase of a KIA Sportage or Hyundai Tucson! These SUVs have narrowly escaped the impact of the recent tax increase, thanks to their engine size of 1999cc. The difference of just 2cc has saved them from being subjected to this new taxation.
Conclusion
The amended bill has introduced fixed tax rates instead. These increased tax rates are likely to make higher engine capacity vehicles costlier for the potential buyers. The government is trying to tax the rich to avoid burdening the poor. We will have to wait and see the impact of this policy.
Were you planning to buy any car above 2000cc? If yes, would you buy it now? Tell us in the comment section below.
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