Typo causes confusion among car assemblers

MUHAMMAD ALI

KARACHI: A typographical error in the Finance Bill 2019 has caused deep confusion among local car assemblers, provincial excise and taxation departments, dealers and the owners of motor vehicles.

The Finance Bill 2019 stated that the mode of advance tax on registration of new locally assembled motor vehicles and transfer of registration or ownership of a private motor vehicle has been changed from lump sum advance tax payment to ‘per seat basis’. And, the provincial excise and taxation departments and the local car manufacturers will have to collect advance tax under sub-section 1, 2 &3 of section 213 of the Income Tax Ordinance, 2001, respectively on per seat basis, annually. However, the advance tax under the said section is one-time tax to be collected at the time of registration or transfer of registration or ownership of a private motor vehicle.

Now, the Federal Board of Revenue (FBR) has clarified that the misperception regarding the revision of advance tax was due to a typographical error which was rectified in the Finance Act-2019. The rate of tax for the token payment and registration of cars is the same that was charged in the previous year. There is no enhancement or reduction in the tax rate.

FBR further added that no tax has been levied on private cars on the basis of seating capacity. However, the people who have not filed tax returns will have to pay double tax than the people who are on the Active Taxpayer List (ATL). Any person who thinks he is not eligible to pay tax can inform the FBR beforehand who can be considered for exemption from payment of this additional tax.