FBR stops short of providing sales tax relief to car assemblers


ISLAMABAD: The Federal Board of Revenue (FBR) has withdrawn at the eleventh hour a summary that it earlier moved to seek the federal cabinet’s approval for reducing sales tax liabilities of car assemblers, claimed a report in The Express Tribune.

FBR Chairman Shabbar Zaidi has directed the departments concerned to take immediate action against non-filers of sales tax returns for the July-August period. The share of sales tax in the total collection of taxes has sharply increased to 46% during July and August from the traditional level of around 38%.

It had been forwarded to abolish 3% value added tax on 32 imported products and charge lower taxes on sales of auto parts, tyres, tubes and batteries. The summary was withdrawn the day the cabinet was scheduled to meet and discuss it along with other agenda items.

The FBR chairman is quoted as saying in the report that he decided that the three products being used by the car assemblers would be taxed at the maximum retail price. However, the FBR has kept unchanged its decision to abolish the 3% tax, which will be implemented subject to approval of the federal cabinet.

Car assemblers have been availing many tax concessions and are also protected from international competition, which has deprived consumers of the opportunity to buy imported vehicles at affordable prices.

In an earlier summary, it had been proposed to exclude imported storage batteries, auto parts, tyres and tubes from the retail price taxation. The goods are currently taxed on the maximum retail price under Third Schedule of the Sales Tax Act.

The FBR’s revenue collection has fallen short of the target by Rs64 billion in the first two months of the current fiscal year. During the two months, the FBR collected Rs579.4 billion and Rs265 billion or 45.7% of total taxes was collected on account of sales tax.


  1. Pakistan is now and will always be exempt from Federal taxes on the CKD of EV’s (Electric Vehicle)that works on Li-ion batteries for a distance upto 200 KM. The Global Climate Change has exempted all transport vehicles from Federal taxes, duties.
    It is suggested that they should be exempted due to recommendation of Global Climate Change and these cars are least carbon emitting, saves the environment.


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