Taxes You Pay When Buying or Registering a Vehicle

Buying a car in Pakistan involves more than the showroom price — multiple federal and provincial taxes apply at registration, transfer, and annually thereafter. Many buyers are surprised by advance income tax under Section 231B, especially non-filers who pay considerably more.

Section 231B Advance Tax on New Vehicle Registration

Engine CapacityFiler Rate (Approx.)Non-Filer Rate (Approx.)
Up to 1000ccLower fixed amount2-3x filer rate
1001cc - 2000ccModerate fixed amount2-3x filer rate
Above 2000ccHigher fixed amount2-3x filer rate

Important: Exact 231B slab amounts are revised by FBR periodically. Non-filers should expect to pay roughly double the filer rate or more — becoming an active filer before purchase can result in real savings.

Tax on Vehicle Transfer (Section 231B(2))

When a used vehicle changes ownership, advance tax is again collected at the time of transfer based on engine capacity and the vehicle's age, with the same filer/non-filer rate differential applying.

Annual Token Tax vs Income Tax

  • Token tax is a provincial motor vehicle tax paid annually to the Excise & Taxation department
  • 231B/231A advance income tax is a separate federal tax collected at registration, transfer, or leasing
  • Both must be paid; one does not substitute for the other
  • Withholding tax paid under 231B can be adjusted against your annual income tax liability if you are a filer

Frequently Asked Questions

What is Section 231B advance tax on vehicles?
Section 231B requires advance tax to be collected on registration of new locally manufactured/assembled motor vehicles, based on engine capacity, with non-filers paying a substantially higher rate than filers.
Do non-filers pay more tax when buying or transferring a vehicle?
Yes, non-filers pay significantly higher advance tax rates on both vehicle registration and transfer compared to active filers, sometimes double or more depending on engine capacity.
Is annual token tax the same as income tax on vehicles?
No, annual token tax is a provincial motor vehicle tax paid yearly to keep the vehicle legally registered, while advance income tax under Section 231B/231A is a separate federal tax collected at registration, transfer, or leasing.

Buying or Transferring a Vehicle?

Become a filer first and save thousands in advance tax. Talk to our experts today.