KARACHI - Excise and Taxation Department, Sindh has showed reservations over increase of 900 per cent in advance withholding tax by Federal Board of Revenue, saying the new tax rates will affect the excise department/Sindh revenue from motor vehicle registration and transfer.

Addressing a press conference on Saturday, Provincial Minister for Excise and Taxation Mukesh Kumar Chawla said that the implementation of the new rates is impossible in the time frame given by FBR. Moreover, the new tax rates will discourage people at registration and transfer process of their vehicles and will ultimately add to the law and order situation of the country.

Under the income tax ordinance Section 232-B, the federal government collects advance withholding tax annually on motor registration. According to Chawla, the rates for this tax were Rs7500 for vehicles of 850CC and for the vehicles of 2000CC and above these were Rs50,000 but now in the current budget this tax has been increased from 50 per cent to 900 per cent for different categories of vehicles. Income tax filer and non-filer categories have been included in the tax collection under the new orders. This tax was collected only once during the time of the vehicle registration but under the new orders it will be collected for five years every time at the vehicle’s transfer.

As per the new decision for filer, the advance withholding tax on 850CC vehicles has been increased from Rs7500 to Rs10,000 while for 2000CC vehicles Rs150,000 and for vehicles of 3000CC and above the tax rates have been raised to Rs250,000.

For the income tax non-filers the advance withholding tax on 850CC vehicles is Rs10,000, for 2000CC vehicles it is Rs350,000 and for vehicles of 3000CC and above the tax rates are 450,000.

Chawla said that the FBR had also asked them (Sindh) to implement and recover this tax from July 1, which was not possible for them as the federal body had not provided them with the data of tax filers and non-filers.

“We don’t have the options and access to check and verify the income tax filers and non-filers. The FBR will provide us the data of the filer in a CD every month but our computer software needs to be upgraded to collect the tax with the new amendments” he said, adding that they would need ‘at least’ a month to upgrade their software and computer system. “The FBR should come and sit with us to discuss the issues and problems connected with the implementation of the new tax rates. They should upgrade our system and should also pay us the service charges,” said Chawla.

He said that the people would not transfer their vehicles for five years and will run their vehicle on authority letter—a process used in the bygone days—thus increasing the use of the vehicles in criminal activities. “Why would someone waste Rs450,000 on only transfer of the car. They will run the vehicles on authority letters as they were doing in the past,” said Chawla explaining how the new tax rates will affect the excise department revenue from motor vehicle registration and transfer in the province. The department is generating 70 per cent of the total provincial revenue, said the minister, adding that the new tax rates are cruelty with the people and such drastic increase has never been seen in the history. Chawla has asked the FBR to reconsider its decision and also provide the department enough time within which they could fix their system according to the needs of the new rates.