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Sections 231AB and 231B of the Income Tax Ordinance, 2001 require advance tax deduction on cash withdrawals exceeding Rs. 50,000 for non-filers, and on purchase, registration, leasing, sale, and transfer of motor vehicles. These provisions promote documentation, differentiate between filers and non-filers, and encourage voluntary tax compliance.
Every banking company shall deduct advance adjustable tax at the rate of 0.8% of the cash withdrawal from a person whose name is not appearing in the active taxpayers’ list on the sum total of the payments for cash withdrawal in a day, exceeding fifty thousand rupees.
WITHHOLDING TAX DEDUCTION / RATES | |||||
|---|---|---|---|---|---|
APPLICABLE TO CO / AOP / IND | |||||
SR | UNDER | PARTICULARS / DESCRIPTION | FILER | NON | TAX |
1 | 231AB | Cash withdrawal exceeding Rs. 50,000 in a single day for all accounts | - | 0.8% | ADJ |
231B(1): Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of registration of a motor vehicle, at the rates specified in DIVISION VII OF PART IV OF THE FIRST SCHEDULE.
231B(1A): Every leasing company or a scheduled bank or a non-banking financial institution or an investment bank or a modaraba or a development finance institution, whether shariah compliant or under conventional mode, at the time of leasing of a motor vehicle to a person whose name is not appearing in the active taxpayers list either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.
231B(2): Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of transfer of registration or ownership of a motor vehicle, at the rates specified in DIVISION VII OF PART IV OF THE FIRST SCHEDULE.
231B(2A): Every motor vehicle registration authority of Excise and Taxation Department shall, at the time of registration, collect tax at the rates specified in DIVISION VII OF PART IV OF THE FIRST SCHEDULE, if the locally manufactured motor vehicle has been sold prior to registration by the person who originally purchased it from the local manufacturer.
231B(3): Every manufacturer of a motor vehicle shall collect, at the time of sale of a motor car or jeep, advance tax at the rate specified in DIVISION VII OF PART IV OF THE FIRST SCHEDULE from the person to whom such sale is made.
WITHHOLDING TAX DEDUCTION / RATES | ||||||
|---|---|---|---|---|---|---|
APPLICABLE TO CO / AOP / IND | ||||||
SR | UNDER | PARTICULARS / DESCRIPTION | ENGINE CAPACITY | FILER | NON | TAX |
PURCHASE OF MOTOR VEHICLE | ||||||
1 | 231B(1A) | At the time of motor vehicle leasing | Any motor vehicle | - | 12% | ADJ |
2 | 231B(1 & 3) | On registration by excise and taxation department; or On sale by manufacturer, car or jeep Provided that the value for the purpose of the Table shall be in case of motor vehicle;
| Upto 850cc | 0.5% of the Value | 1.5% of the Value | ADJ |
Upto 851cc to 1000cc | 1% of the Value | 3% of the Value | ||||
Upto 1001cc to 1300cc | 1.5% of the Value | 4.5% of the Value | ||||
Upto 1301cc to 1600cc | 2% of the Value | 6% of the Value | ||||
Upto 1601cc to 1800cc | 3% of the Value | 9% of the Value | ||||
Upto 1801cc to 2000cc | 5% of the Value | 15% of the Value | ||||
Upto 2001cc to 2500cc | 7% of the Value | 21% of the Value | ||||
Upto 2501cc to 3000cc | 9% of the Value | 27% of the Value | ||||
Above 3000cc | 12% of the Value | 36% of the Value | ||||
In case of imported vehicle or locally manufacture or assembled vehicle, engine capacity is not applicable where, value of vehicle is more than rupees five million | Not applicable | 3% of the Value | 9% of the Value | |||
3 | 231B(2) | Transfer or ownership Tax rate will be reduced by 10% each year from the date of first registration in Pakistan | Upto 850cc | - | - | ADJ |
Upto 851cc to 1000cc | Rs. 5,000 | Rs. 15,000 | ||||
Upto 1001cc to 1300cc | Rs. 7,500 | Rs. 22,500 | ||||
Upto 1301cc to 1600cc | Rs. 12,500 | Rs. 37,500 | ||||
Upto 1601cc to 1800cc | Rs. 18,750 | Rs. 56,250 | ||||
Upto 1801cc to 2000cc | Rs. 25,000 | Rs. 75,000 | ||||
Upto 2001cc to 2500cc | Rs. 37,500 | Rs. 112,500 | ||||
Upto 2501cc to 3000cc | Rs. 50,000 | Rs. 150,000 | ||||
Above 3000cc | Rs. 62,500 | Rs. 187,500 | ||||
Engine capacity is not applicable where, value of vehicle is more than rupees five million Tax rate will be reduced by 10% each year from the date of first registration in Pakistan | Not applicable | Rs. 20,000 | Rs. 60,000 | |||
Section 231AB of the Income Tax Ordinance, 2001 requires banking companies to deduct advance adjustable tax on cash withdrawals exceeding Rs. 50,000 in a single day made by persons whose names do not appear on the Active Taxpayers List (ATL). This provision applies to individuals, AOPs, and companies, and aims to discourage undocumented cash transactions while promoting inclusion in the tax system.
Similarly, Section 231B mandates the collection of advance tax on the purchase, registration, leasing, sale, and transfer of motor vehicles by Excise and Taxation authorities, manufacturers, and financial institutions. The applicable tax rates vary based on engine capacity, vehicle value, and filer status, with higher rates imposed on non-filers and a 12% advance tax on vehicle leasing to non-filers.
Overall, Sections 231AB and 231B ensure advance tax collection, enhance documentation of financial transactions, and encourage voluntary tax compliance by differentiating between filers and non-filers.
