WHT on laden weight of goods: FBR approaches motor vehicle authorities

The Federal Board of Revenue has approached the provincial motor vehicle authorities for collection of withholding tax, @ one rupee per kilogramme of the laden weight of goods transport vehicles, to generate around Rs 2.5 billion in 2010-11.
Sources told Business Recorder here on Saturday that the FBR has directed all the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to immediately conduct audit of three categories of withholding agents ie banks, airlines and provincial motor vehicle authorities. Through provincial governments, the FBR will start strict monitoring of the provincial motor vehicle authorities, the FBR instructions added.
The existing slabs of advance tax deductible on goods transport vehicles were revamped and rationalised through Finance Act 2010. With effect from July 1, 2010 onwards, advance tax under section 234 of the Income Tax Ordinance 2001 shall be deductible at the rate of one rupee per kilogramme of the laden weight of the goods transport vehicle.
The FBR has estimated collection of Rs 2.5 billion under this head through audit of the concerned sector. The FBR will also involve Chief Commissioners of all four provinces to ensure collection of withholding tax at the rate of one rupee per kilogramme of the laden weight of the goods transport vehicle.
Sources added that with the growth in the national economy, inland freight carriage activities has increased manifold. This is witnessed by increase in goods transport vehicles. The income tax on the income generated from this activity was charged along with annual payment of motor vehicle tax.
This tax was' based on the laden weight capacity of a goods transport vehicle. Previously, such tax was chargeable on seven tax rates ranging from Rs 1200 to Rs 36,000 per annum. These rates were charged according to the six laden weight capacity slab. These tax rates were in effect since 2002.
In order to rationalise and simplify' these tax rates, slab structure was abolished and tax was imposed at the rate of Rs 1 per kilogram of the laden weight capacity of a goods transport vehicle. However, income arising from contracts of goods forwarding services shall remain taxable at the 'existing rate' of 2 percent, sources added.