Nearing the completion of its tenure, the PML-N Government announced its sixth Federal Budget for the Fiscal Year 2018-19. The Government indicated towards some bold moves, in an attempt to incorporate more people into the tax base and maximize the generation of revenue through taxes.
Some in the Auto Sector did not entirely appreciate the changes that this budget has proposed. The newly proposed changes in the budget for Fiscal Year 2018-19 would bar Non-Filers to Purchase cars worth Rs.40 Lacs or more. This means that anyone, whose name does not appear in FBR’s Active Taxpayers’ list, won’t be allowed to purchase cars in their name. This prohibition is entirely applicable on both local and imported vehicles.
The Way Around this Interdiction and its Effectiveness
While Non-Filers would still be able to purchase cars that cost less than Rs.40 Lacs, the proposed budget makes it very difficult to do so. This left many wondering about how to purchase cars in Pakistan as a Non-Filer. People have identified a way around this interdiction for Non-Filers to purchase cars worth Rs.40 Lacs and more but there’s a significant catch in it.
Filers can purchase expensive cars on behalf of the Non-Filers, however; people would hesitate as the trust factor is extremely decisive in this move. Also, if a Filer agrees to do so, he’ll have to explain the source of money in his returns.
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The Growth of Auto Sector in the Country
Currently, the Auto Sector is rapidly growing in Pakistan and with the demand on the rise, several new car manufacturers are entering into Pakistan’s market. A 22% increase in car sales was recorded in the FY 2017-18, which has lured in some market leaders of this industry into the country.
On the other hand, manufactures are highly concerned about the impact of these proposals as the sales would surely decline by a slight margin.
Nevertheless, this move would surely lure in a part of the population in the Tax net and with less than 1% of the total population as Active Taxpayers in Pakistan, this move by the government might actually prove to be effective.