Govt jacks up tax on registration of vehicles above 2,000cc

• Tax rates for higher-income brackets jacked up.
• Increase made under demands of IMF.
• Fixed tax on imported and locally manufactured vehicles.

ISLAMABAD: The tax on the registration of vehicles above 2,000cc as well as the tax rates on higher income brackets of salaried and non-salaried classes, has been jacked up under the demands laid by the International Monetary Fund (IMF), The News reported.

There was no increase in tax rates for the registration of vehicles and higher income brackets for salaried and non-salaried classes a day before the Budget for 2023-24. But to revive the IMF programme, the government had to undertake additional taxation measures to fetch more than Rs215 billion in the national kitty.

So all those avenues were found where the rates could be identified for bringing additional revenues, but the government did not bother to find out those who were already out of the tax net.

According to the amended Finance Bill 2023-24 approved by the parliament on Sunday, the government slapped a fixed tax on imported and locally manufactured vehicles from 2,001cc to above 3,000cc.

The fixed rate of tax would be 6% of the value of a vehicle having an engine capacity of 2,001cc to 2,500cc. The fixed rate of tax would be 8% of the value of a vehicle with an engine capacity of 2,501cc to 3,000cc.

The fixed rate of tax would be 10% of the value of a vehicle having engine capacity above 3,000cc. The Finance Bill 2023-24 also approved jacking up tax rates for higher income brackets of salaried and non-salaried classes in the budget.

The tax rate remained unchanged for salaried individuals where taxable income exceeds Rs1,200,000 but does not exceed Rs2,400,000. The rate of tax would remain at Rs15,000 + 12.5% of the amount exceeding Rs1,200,000.

Where the taxable income exceeds Rs2,400,000 but does not exceed Rs3,600,000, the rate of tax would be Rs165,000 + 22.5% of the amount exceeding Rs2,400,000.

Where the taxable income exceeds Rs3,600,000 but does not exceed Rs6,000,000, the rate of tax would be Rs405,000 + 27.5% of the amount exceeding Rs3,600,000.

Where the taxable income exceeds Rs6,000,000, the rate of tax would be Rs1,095,000 plus 35% of the amount exceeding Rs6,000,000.

The amended Finance Bill 2023 has also increased income tax on the income of individuals and associations of persons (AOPs) except a salaried individual.

The revised slabs for the individuals/AOPs revealed that where taxable income exceeds Rs600,000 but does not exceed Rs800,000, the rate of tax would be 7.5% of the amount exceeding Rs 600,000.

Where the taxable income exceeds Rs800,000 but does not exceed Rs1,200,000, the rate of tax would be Rs15,000 + 15% of the amount exceeding Rs800,000.

Where the taxable income exceeds Rs1,200,000 but does not exceed Rs2,400,000, the rate of tax would be Rs75,000 + 20% of the amount exceeding Rs1,200,000.

Where the taxable income exceeds Rs2,400,000 but does not exceed Rs3,000,000, the rate of tax would be Rs315,000 plus 25% of the amount exceeding Rs2,400,000.

Under the new slab, where taxable income exceeds Rs3,000,000 but does not exceed Rs4,000,000, the rate of tax would be Rs465,000 + 30% of the amount exceeding Rs3,000,000.

Where taxable income exceeds Rs4,000,000, the rate of tax would be Rs765,000 plus 35% of the amount exceeding Rs4,000,000.