The Federal Board of Revenue (FBR) has proposed an increase in the Withholding Tax (WHT) rates for vehicles with engine capacities exceeding 1,300cc as part of the upcoming budget for fiscal year 2025-26. The proposal aims to generate additional revenue for the government, according to a news report.Â
Currently, the WHT rates are set at 2% for vehicles with engine capacities between 1,300cc and 1,600cc, 3% for vehicles between 1,601cc and 1,800cc, 5% for vehicles between 1,801cc and 2,000cc, 7% for those between 2,001cc and 2,500cc, 9% for vehicles between 2,501cc and 3,000cc, and 12% for vehicles above 3,000cc. The proposed changes would raise these rates across the various categories to increase tax revenue.
The move follows last year’s shift to a value-based taxation model, which replaced fixed advance taxes with levies linked to vehicle prices.Â
In 2024, the FBR collected more than Rs4 billion in withholding taxes from vehicles. With the proposed tax hikes, the FBR expects significant revenue growth in the coming fiscal year.
