The tax collection of new car registrations is reduced by 10.2%
The Federal Revenue Board (FBR) has collected withholding taxes in the amount of Rs. 8.28 billion new car registrations in the first ten months of the current fiscal year. The collection of taxes has been reduced by 10.2 percent of the amount collected in the same period last year.
The reason behind this decrease is a reduction in car sales due to the economic slowdown. The amount collected under tax withholding in the new car registry has plummeted from Rs. 9.23 billion in the period of July-April 2017/18.
In addition, car sales decreased 4.5 percent in the period analyzed, as the depreciation rupee led to a rise in prices, which discouraged the purchase of new cars. Another factor behind the low car sales is a restriction for non-respondents to have their own vehicles. The restriction was subsequently eliminated to cushion car sales.
Despite the relaxation towards non-respondents, the monthly collection of this withholding tax registered a decrease. In April, the collection of the withholding tax was reduced to Rs. 912 million Rs. 1,078 billion in the same period, marking a decrease of 15.4 percent.
Whereas, car sales also fell four percent to 162,692 units in July-April. Car sales last year in the same year were recorded in 170,354 units.
According to sources, the withholding of taxes on the registration of new cars has decreased due to the economic slowdown and the restrictions imposed on non-respondents.
In addition, local car manufacturers increased prices to adjust the devaluation of the constant rupee, which also affected total sales and the collection of withholding tax.