2.5 percent tax cut on car purchase notified

The Federal Board of Revenue (FRB) has notified 2.5 percent reduced rate of withholding tax on the local purchase of cars. The board issued SRO.661(I)/2007 on Monday reducing the levy.
Through SRO, the board has clarified that tax under section 231B shall be collected at the rate of 2.5 at the time of sale of motor car and the withholding tax agents (manufacturer or authorised dealer), irrespective of the date of booking or advance payment made by the purchaser, shall collect advance tax where sale invoice is issued and delivery of motor car is made after August 31, 2007.
The FBR has also clarified that a new section 231B has been inserted envisaging that every manufacturer of cars or its authorised dealer is obliged to collect advance tax at 2.5 percent (as amended by clause (9A) of Part II) of the value of car after August 31, 2007 at the time of sale, irrespective of the date of booking or advance payment made by the purchaser. The tax collected is adjustable and the taxpayers are entitled to claim credit of the same while filing return of income for the relevant tax year.