KARACHI: Confusion gripped the auto market over the matter of sale of new automobiles to non-filers of tax returns. The Finance Act, 2018 prohibited any sale of new vehicles to non-filers, but a letter from Director Excise and Taxation, Region C, Lahore sent to officers of the department across Punjab claimed the requirement does not apply to cars below 1000cc engine capacity.

The letter cited “discussion with FBR authorities at Lahore,” adding written clarification is still awaited. “There is no requirement of filer for registration or transfer of motor cycles, commercial vehicles and cars below 1000cc” read the letter dated July 4th, 2018.

The very next day, Jahangir Ahmad, Commissioner Inland Revenue in Lahore, shot back, saying the matter is “under process and shall be referred to the Federal Bureau of Revenue (FBR),” adding that excise and taxation director has circulated “a fake clarification attributing its source to the undersigned, whereas he neither held any meeting nor discussed the case” with the commissioner.

“The instructions issued by the said director are in sheer negation of law and are not backed by any clarification by the FBR. In view of the foregoing, it is requested to withdraw the fake instructions mentioned above in order to avoid loss of state revenue.”

When contacted, Pakistan Automotive Manufacturers Association (Pama) Director General Abdul Waheed Khan said he had sent both letters to his association. He said as may be seen the Commissioner IRS letter refutes the contents of the Excise Lahore letter and declare its contents as “fake”.

Confusion prevails in the industry because the matter remains “under process” and no firm clarification from the FBR has been issued on whether there are any exceptions to the rule requiring purchase and registration of new vehicles as well as imported vehicles to be a filer of tax return.

It may be noted here that after insertion of Section 227-C, subsection (a) of Income Tax Ordinance, 2001, an amendment brought through Federal Finance Act, 2018, “any application for booking, registration or purchase of a new locally manufactured motor vehicle or for registration of an imported vehicle shall not be accepted or processed by any vehicle registering authority of Excise and Taxation Department or a manufacturer of a motor vehicle respectively, unless the person is a filer.”

Published in Dawn, July 8th, 2018