Car companies begin collecting increased advance income tax

Auto assemblers have told their authorised dealerships to collect increased advance income tax from car buyers.

The higher rate will be applicable on pending orders to be delivered and invoiced from July 1, 2022 and onwards.

In the federal budget for 2022-23, the government has notified higher rates with effect from the new fiscal year.

Advance income tax on Suzuki Cultus has been increased from Rs15,000 to Rs20,000 for filers and from Rs30,000 to Rs60,000 for non-filers of income tax returns. The company has asked customers to pay the difference.

Same is the case with all other car companies.

The Motor Registration Wing of the Directorate of Excise, Taxation and Narcotics Control has also released a notification.

It stated that the tax required to be collected under section 231B shall be increased by 200% of the rate specified in the first schedule in case of persons not appearing in the active taxpayers' list. It means a non-filer will be paying 200% more advance income tax than a filer.

The car companies will now be collecting: Rs10,000 and Rs30,000 from filers and non-filers, respectively, when they buy car with engine size below 850cc; Rs20,000 (filer) and Rs60,000 (non-filer) with engine size between 851cc and 1,000cc; Rs25,000 and Rs75,000 with engine size 1,001cc and 1,300cc; Rs50,000 and Rs150,000 with engine size between 1,301cc and 1,600cc; Rs150,000 and Rs450,000 with engine size between 1,601cc to 1,800cc; Rs200,000 to Rs600,000 with engine size between 1,801cc and 2,000cc; Rs300,000 and Rs900,000 with engine size between 2,001cc and 2,500cc; Rs400,000 and Rs1,200,000 with engine size between 2,501cc and 3,000cc; Rs500,000 and Rs1,500,000 for engine size above 3,000cc.

“In cases where engine capacity is not applicable and the value of the vehicle is Rs5 million or more, the rate of collectible (tax) shall be 3% of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured vehicles,” the notification added.