Advance Tax – Part II

Introduction

Advance tax is a type of tax that individuals, businesses, and corporations must pay.  Certain categories of taxpayers are required to pay advance tax, and non-compliance can result in penalties and legal consequences.”

This is Part II of our article, where we will talk more about advance tax on new motor vehicle registration, transfer of motor vehicles, tax on telephone, internet, and mobile users, as well as tax on retailers and distributors.

School Supplies

Advance Tax – Part I

Advance Tax on Registration of Motor Vehicles – Sec 231B, Division VII Part IV 1^st Schedule

First Registration

Based on engine capacity:

Every person shall pay advance tax on first registration Advance tax shall pay ranging from Rs.10,000 to  Rs.500,000.

Electronics

At Import Stage when;

• Value of vehicle Rs.5 million or above and
• Engine Capacity is not applicable

3% of import value including customs duty, federal excise duty, and sales tax.

Date of First Registration means:

Vehicle Acquired From	Date of First Registration
Armed Forces of Pakistan	Board Arrow Number
Foreign Diplomat or a Diplomatic Mission in Pakistan	By Ministry of Foreign Affairs
Federal or Provincial Government	Last day of the year of manufacturing
Other Cases	By the Excise and Taxation department

Transfer of Vehicle within 5 years from first registration

The tax shall be collected ranging from Rs.5,000 to Rs.62,500.

Rs.20,000, if the value of a vehicle is Rs.5 million or above and engine capacity is not applicable.

Reduction @10%

There is a reduction of @10% every year on tax on the transfer.

Computers and Tabs

Local Manufactured vehicle sold before registration:

Rs. 50,000 to Rs.200,000 shall be collected for a such vehicle that is manufactured locally but it is sold before registration.

Motor vehicle includes:

• Car
• Caravan automobiles
• Jeep
• Limousine
• Pickup
• Sports Utility Vehicle
• Trucks
• Vans
• Wagon
• Any other vehicle but excluding;
  • Motor Vehicle below an engine capacity of 200cc.
  • A rickshaw or a motorcycle-rickshaw and
  • Vehicle used for public transport, carriage of goods, and agriculture machinery.

Video Games

Advance tax on vehicles shall not be paid in the following cases;

• Purchase by Federal, Provincial, local government, foreign diplomat, or diplomatic mission in Pakistan.

• Light Commercial Vehicles leased under Prime Minister’s Youth Business Loan Scheme (covered under clause 102 Part IV 2^nd Schedule).

• Tax on the same vehicle has been paid on the import stage by the same person.

• After 5 years after the date of first registration.

Leasing for Non-Active Tax Payers Buyers

Leasing companies, scheduled banks, NBFCs, investment banks, Modarabas, and Development Finance Institutions shall collect 4% of the vehicle’s value as advance tax from buyers who are non-active taxpayers.

Advance tax from Telephone / Mobile / Prepaid Card users – Section 236, Division V Part IV 1^st Schedule

Telephone

For telephone bills more than Rs.1,000 Advance tax @10%.

Mobile / Internet / Prepaid Cards

15%, also applicable to the sale price of internet prepaid cards.

Advance Tax at the time of Sale by Auction / Tender– Section 236 A, Division VIII Part IV 1^st Schedule

Public Auction / Tender	Rate of Advance Tax Collected from Purchaser
Purchase of Property	10%
Renewal of License previously sold by Public Auction	10%
Immovable property	5%
Sale of Right to collect tolls	10%

Advance Tax on Sales to Distributors, Dealers, and Wholesales – Section 236 G, Division XIV Part IV 1^st Schedule

As per the below table;

Tax Collected By	Tax Collected From	List of Products	Rate of Advance Tax
Manufacturer / Commercial Importer	Distributors / Dealers and Wholesalers	Pharmaceuticals, Auto Parts, Tyres, Varnishes, Chemicals, Cosmetics, IT equipment, Sugar, Cement, Iron and Steel Products, Fertilizer, Edible Oil and Ghee, Motorcycles, Poultry and Animal Feed, Cigarettes, Glass, Textile, Electronics, Beverages, Pesticides, Paint and Foam Sector	- Fertilizer = 0.7% - Fertilizer = 0.25% if the buyer’s name is registered in the active taxpayer list for income tax and sales tax. - All other cases = 0.1%

Advance Tax on Sales to Retailers – Section 236 H, Division XV Part IV 1^st Schedule

As per the below table

Tax Collected By	Tax Collected From	List of Products	Rate of Advance Tax
Manufacturer / Distributors, Dealer, Wholesaler, Commercial Importer	Retailers, Wholesaler if sold by a distributor	Electronic Goods, Poultry and Animal Feed, Beverages, Auto Parts, Tyres, Varnishes, Cosmetics, IT equipment, Pharmaceuticals, Sugar, Cement, Iron and Steel Products, Motorcycles, Pesticides, Cigarettes, Glass, Chemicals, Textile, Edible Oil and Ghee, Paint and Foam Sector	0.5%

Advance Tax on Remittances outside Pakistan through credit or debit cards – Section 236 Y, Division XXVII Part IV 1^st Schedule

1% at the time of transfer of any amount remitted outside Pakistan through a credit card by every banking company.

Advance Tax – Part I

FBR Website

Also Read:

Final Tax Regime

Income from Property