Filer status
Tax on Buying and Transferring a Car in Pakistan
Advance tax under section 231B is collected twice over a car's life: once by the Excise and Taxation registering authority at first registration, charged on value in engine-capacity bands, and again on any later transfer of registration, as a fixed amount by band. The transfer charge falls by a tenth for each year since first registration, and nothing at all is collected once the vehicle is five years old.
Where these figures come from
- Statutory basis
- Income Tax Ordinance, 2001, as amended by the Finance Act 2026, for tax year 2027 (1 July 2026 to 30 June 2027).
- Last checked against the statute
- by BarrioVibe, which files income tax returns through FBR IRIS.
These figures are an estimate computed from the rates above, not tax advice for your situation. Your return depends on facts a form cannot see, so treat the number as a starting point and speak to us before you file on it.
What it comes to on your car
Enter the engine capacity, the transaction and the age. The calculator applies the band, the taper and the five-year cut-off, and shows what the other filer status would pay on the same car.
Vehicle TaxTwo different charges, and they work differently
Section 231B(1) is the charge at first registration of a locally manufactured vehicle, collected by the Excise and Taxation registering authority at the Division VII rates. It is calculated on the value of the vehicle within engine-capacity bands, so a more expensive car in the same band pays more.
Section 231B(2) is the charge on a later transfer of registration or ownership, and it is a fixed amount per band rather than a percentage. The value of the car does not enter it at all. Someone selling a well-maintained car and someone selling a wreck of the same engine size face the same figure, subject to the age reduction.
Selling your allocation before the car is registered
Booking a car and selling the allocation before taking delivery, sometimes called own-money, has its own rule. Section 231B(2A) requires the registering authority to collect tax at the Division VII rates at registration where a locally manufactured vehicle has been sold prior to registration by the person who originally bought it from the manufacturer.
The effect is that the transaction does not escape the section by happening before the car reaches the register. Whoever finally registers it pays, and the person who flipped the allocation has not removed the charge, only moved it.
Who the section does not apply to
The proviso to section 231B(1) lists the exemptions, and they are institutional rather than personal. There is no exemption here for a first-time buyer, a small car or a low income.
- The Federal Government
- A Provincial Government
- A Local Government
- A foreign diplomat
- A diplomatic mission in Pakistan
What this tax is, and is not
It is advance income tax, not a road tax and not a registration fee. It is collected by the Excise and Taxation department but it belongs to your federal income tax account, and it is creditable against your liability for the year in the ordinary way.
That is worth separating from provincial motor vehicle token tax, which is a genuinely different provincial charge levied annually on keeping a vehicle on the road. The two are collected by the same department and are constantly confused, in much the same way that federal advance tax on property and provincial property tax are confused.
Questions
The questionspeople ask
How much tax do I pay when buying a car in Pakistan?
At first registration, advance tax under section 231B(1) at the Division VII rates, charged on the value of the vehicle within engine-capacity bands. On a later transfer, a fixed amount by band instead, reduced by a tenth for each year since first registration.
Is there tax on transferring a car older than five years?
No. The proviso to section 231B(2) provides that no collection shall be made on transfer of vehicles after five years from the date of first registration in Pakistan. The ten per cent annual reduction stops mattering at that point because there is nothing left to collect.
How much more does a non-filer pay on a car?
Three times the filer amount, not double. The Tenth Schedule doubles rates by default, but section 231B carries a proviso taking the increase to two hundred per cent, which trebles the figure.
I paid tax at the showroom. Do I pay again at registration?
You should not. Section 231B(4) disapplies the registration charge where you produce evidence that tax was already collected from the same person under sub-section (3), by the manufacturer, or under section 148 on import. Keep the receipt and check it is in the name of the person registering the vehicle.
Is advance tax on a car the same as token tax?
No. Section 231B is federal advance income tax, creditable against your income tax liability for the year. Motor vehicle token tax is a separate provincial charge for keeping a vehicle on the road. Both are handled by Excise and Taxation, which is why they get confused.
What if I sell my car booking before registering it?
Section 231B(2A) requires the registering authority to collect at the Division VII rates where a locally manufactured vehicle was sold before registration by the person who originally bought it from the manufacturer. The charge is not avoided, only shifted to whoever registers it.
Does section 231B apply to commercial vehicles?
It is no longer limited to private ones. The Finance Act 2022 omitted the word "private" from the heading and from sub-section (1), although the Ordinance contents page and most published summaries still carry the old title.
How is an electric vehicle taxed under section 231B?
By value rather than engine capacity. Where capacity does not apply and the vehicle is worth five million rupees or more, Division VII sets a flat percentage at registration and a fixed twenty thousand rupees on transfer, with the same annual reduction and five-year cut-off.
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We file returns through IRIS every day. If the answer above raises a question about your own case, that is the conversation to have before the deadline rather than after it.