ISLAMABAD    -   The Federal Board of Revenue (FBR) on Tuesday clarified that rate of tax has not been changed in the financial budget-2019 for the token payment and registration of cars. “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,” the FBR said and 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 the payment of this additional tax. According to the FBR, after verification it was noticed that this misperception was due to a typographical mistake which was rectified in the Finance Act-2019.

Earlier, there was perception after reading the Finance Bill that the federal government had announced a drastic 400 percent increase in income and withholding tax which will be collected at the time of new vehicle registration, transfer of vehicle ownership, and with token tax. It was reported on media that that government had also decided to change the former ‘one-time’ taxes to annual levies because of which vehicle owners who pay the token tax will have an additional burden of paying Rs3,000 to Rs200,000, while non-filers will have to pay Rs6,000 to 400,000 annually. According to the news, the government in its new policy has divided the cars into 8 slabs in accordance with the engine displacement. The most surprising factor of this new taxation system is the imposition of tax on each seat of the vehicle. The withholding tax will be fixed on an annual basis depending upon the number of seats of a vehicle. However, there will be a separate fee for both filers and non-filers. The non-filers are being targeted to a great extent in this policy with a double fee as compared to what non-filers will have to pay.