The federal government’s proposed budget measures for the upcoming fiscal year could increase the cost of registering vehicles in Pakistan, particularly for individuals who are not listed as active taxpayers.
Both filers and non-filers may face higher withholding taxes when purchasing and registering vehicles, although non-filers are expected to bear a much heavier financial burden.
Tax is collected at the time of vehicle registration and varies based on the vehicle’s engine capacity and the buyer’s tax status. Individuals who regularly file income tax returns and are registered with the Federal Board of Revenue (FBR) generally pay lower rates, while non filers are charged substantially higher taxes.
Under the proposed changes, withholding tax rates for vehicle registration are expected to increase across multiple engine categories. However, the difference between filer and non-filer taxation is expected to become even more pronounced, encouraging more people to register as taxpayers.
The government’s objective is to increase revenue collection and expand the documented tax base. Authorities hope to motivate more citizens to file tax returns and join the formal economy.
However, potential buyers may delay purchases due to higher ownership costs, particularly in lower and middle-income segments where affordability plays a crucial role in purchasing decisions.
Additionally, owners of larger vehicles may face higher tax liabilities because withholding tax rates generally increase with engine capacity. Buyers are therefore being advised to carefully review the expected tax implications before making vehicle purchase decisions.
Overall, if the proposed budget measures are approved, the revised tax structure will come into effect in the new fiscal year. This could lead to a noticeable increase in the overall cost of vehicle registration and ownership, particularly for non-filers.
Earlier, Parliamentary Affairs Minister Tariq Fazal Chaudhry said that a summary has been sent to convene sessions of both the National Assembly and the Senate.
He posted on his X handle, saying that the National Assembly session is proposed to be called on June 10 at 5:00 pm, while a summary has been sent for the Senate session to be held on June 10 at 4:00 pm.
He announced that the Federal Budget for the fiscal year 2026-27 is expected to be presented on June 12.
Also read: Govt considers income tax cut for salaried workers in budget 2026-27
