ISLAMABAD: Pakistan’s tax authority, the Federal Board of Revenue (FBR), has reported a sharp 71% increase in withholding income tax collected on the registration of new cars during fiscal year 2024-25, fueled by rising vehicle sales and revised tax rates.
According to official data, collections under this category reached Rs24.77 billion in FY2024-25, compared to Rs14.44 billion in the previous fiscal year, reflecting strong growth in the automobile sector.
FBR officials attributed the surge to increased new car registrations across the country, along with changes in the tax structure during the year. The growth was evident across major tax offices, signaling improved economic activity and stronger enforcement.
The Large Taxpayers Office (LTO) recorded a significant rise in collections, reaching Rs3.88 billion, up from Rs1.63 billion last year.
Among regional offices, Regional Tax Office Lahore reported collections of Rs3.87 billion, compared to Rs1.35 billion previously. Similarly, Regional Tax Office Islamabad posted Rs2.33 billion, up from Rs1.01 billion, while Regional Tax Office II Karachi saw collections increase to Rs1.59 billion from Rs686 million.
Other regional offices also showed strong performance, including Multan (Rs1.19 billion), Sialkot (Rs1.17 billion), Rawalpindi (Rs1.13 billion), and Faisalabad (Rs1.07 billion). Meanwhile, Large Taxpayers Office Lahore collected Rs1.07 billion, up from Rs855 million in the previous year.
The withholding tax is imposed under Section 231B of the Income Tax Ordinance, 2001, and is collected at the time of vehicle registration.
Analysts noted that the increase reflects a combination of stronger tax enforcement and a rebound in consumer demand for automobiles. However, rising vehicle prices and regulatory adjustments have also contributed to higher tax receipts.
The government continues to rely heavily on withholding taxes as a key revenue stream to meet fiscal targets and manage budgetary pressures.
