Engine capacity above 1300cc: FBR proposes increase in WHT rates on vehicles

ISLAMABAD: The Federal Board of Revenue (FBR) has proposed to increase withholding tax rates on vehicles having engine capacity above 1300cc in the coming budget (2025-26).

Presently, the withholding tax on vehicles is 2 per cent of the total value for those with engine capacities between 1,300cc and 1,600cc; 3 per cent for 1,601cc to 1,800cc; 5 per cent for 1,801cc to 2,000cc; 7 per cent for 2,001cc to 2,500cc; 9 per cent for 2,501cc to 3,000cc; and 12 per cent for vehicles above 3,000cc.

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It has been proposed to raise WHT rates on the said categories of vehicles to generate additional revenue. The move builds on last year’s shift to a value-based taxation model that replaced fixed advance taxes with levies linked to vehicle prices across all categories.

The FBR collected more than Rs4 billion in withholding taxes from all categories of vehicles in 2024. The FBR has projected significant revenue growth after the enhancement in the tax rates for the new fiscal year.

Copyright Business Recorder, 2025