Figures in this guide were checked against the cited official documents on 14 November 2026 (Asia/Karachi).

Section 231B of the Income Tax Ordinance, 2001 collects advance tax on private motor vehicles at registration, transfer and, in a separate sub-section, on certain leases. The rates for Tax Year 2027 are in First Schedule, Part IV, Division VII, read with Rule 1 of the Tenth Schedule for the non-ATL (non-filer) increase, and are printed on the FBR withholding tax rate card updated up to 30 June 2026 as per Finance Act 2026.

This is general information, not tax advice and not an FBR determination. TaxToolSet is independent of the Federal Board of Revenue. Tax facts on this page are reviewed by a Chartered Accountant. The original statute prevails if a rate card or this guide differs from the law.

This is federal income-tax withholding. It is not Punjab token tax, provincial registration fees, or sales tax on the vehicle. TaxToolSet calculates only the components for which a current source-backed rate has been implemented, on the vehicle registration, transfer and token tax hub. Punjab token tax has its own token tax calculator.

Two different 231B tables

The official rate card splits section 231B as follows.

Sub-sections 231B(1) and 231B(3) — value-based rates (typically registration and related collections, as described on the card). The tax is a percentage of the vehicle's value:

Engine capacity ATL (filer) Non-ATL (non-filer)
Up to 850cc 0.50% of the value 1.50% of the value
851cc to 1,000cc 1.00% of the value 3.00% of the value
1,001cc to 1,300cc 1.50% of the value 4.50% of the value
1,301cc to 1,600cc 2.00% of the value 6.00% of the value
1,601cc to 1,800cc 3.00% of the value 9.00% of the value
1,801cc to 2,000cc 5.00% of the value 15.00% of the value
2,001cc to 2,500cc 7.00% of the value 21.00% of the value
2,501cc to 3,000cc 9.00% of the value 27.00% of the value
Above 3,000cc 12.00% of the value 36.00% of the value

These percentages match TaxToolSet's vehicleAdvanceRates implementation used in the filer vs non-filer calculator when a vehicle value and engine capacity are entered.

Sub-section 231B(2) — transfer of registration or ownership, a fixed rupee table:

Engine capacity ATL (filer) Non-ATL (non-filer)
Up to 850cc Nil Nil
851cc to 1,000cc PKR 5,000 PKR 15,000
1,001cc to 1,300cc PKR 7,500 PKR 22,500
1,301cc to 1,600cc PKR 12,500 PKR 37,500
1,601cc to 1,800cc PKR 18,750 PKR 56,250
1,801cc to 2,000cc PKR 25,000 PKR 75,000
2,001cc to 2,500cc PKR 37,500 PKR 112,500
2,501cc to 3,000cc PKR 50,000 PKR 150,000
Above 3,000cc PKR 62,500 PKR 187,500

What “value” means, and vehicles without an engine-capacity band

Endnote 1 on the official rate card (First Schedule, Part IV, Division VII, clause 1) defines value as:

  • imported: the Customs-assessed import value plus customs duty, federal excise duty and sales tax payable at import stage;
  • locally manufactured or assembled: the invoice value inclusive of all duties and taxes; or
  • auctioned: the auction value inclusive of all duties and taxes.

The same endnote says that where engine capacity is not applicable and the value of the vehicle is PKR 5 million or more, the tax collectible under the 231B(1) and 231B(3) table is 3% of that import or invoice value (as defined above).

Endnote 2, for 231B(2), says that where engine capacity is not applicable and value is PKR 5 million or more, the collectible amount is PKR 20,000, and that the rate of tax under that clause is reduced by 10% each year from the date of first registration in Pakistan.

Time limits in the Ordinance

The Income Tax Ordinance, 2001 compilation issued by FBR and amended up to 20 February 2026 includes, under section 231B(1), a proviso that no collection of advance tax under that sub-section shall be made after five years from the date of first registration as specified in section 231B(6). Finance Act 2026 did not amend section 231B or the Division VII rate table itself; it omitted clause (c) of section 231B(6) so that the date of first registration for government vehicles is the Excise and Taxation Department date (see Circular No. 02 of 2026-27, item 28, and Finance Act 2026, section-231B amendment). Check that no later circular after 14 November 2026 changed the five-year cut-off or the 10% yearly reduction.

Leasing to a person not on the ATL

The same February 2026 Ordinance compilation includes section 231B(1A): a leasing company, scheduled bank, NBFC, investment bank, modaraba or development finance institution, at the time of leasing a motor vehicle to a person whose name is not appearing in the Active Taxpayers' List, shall collect advance tax at 4% of the value of the motor vehicle. Finance Act 2026 does not mention 231B(1A). If your transaction is a lease rather than a registration or transfer, confirm current leasing practice with the Ordinance as amended, or with a Chartered Accountant.

Worked example (registration table only)

A locally assembled 1,600cc car with invoice value (inclusive of duties and taxes) of PKR 4,000,000, using only the 231B(1)/(3) table:

  • ATL: 2% × 4,000,000 = PKR 80,000
  • Non-ATL: 6% × 4,000,000 = PKR 240,000
  • Difference: PKR 160,000

This is withholding, not the final income-tax liability, and it ignores provincial fees. Enter your own figures in the vehicle hub and the filer vs non-filer calculator.

The omission of section 231B(6)(c) is also noted in the Finance Act 2026 key changes guide.

Sources