LAHORE, April 10: The Central Board of Revenue proposes to withdraw the withholding tax on cars and other vehicles having 1,000cc or larger engines for the people whose annual income is not taxable, CBR member (Direct Taxes) Vakil Ahmad Khan said on Wednesday.

Mr Kahn was speaking to Dawn here. The decision is likely to take effect from the next financial year.

Presently the owners of old cars are not exempt from the tax despite the relief granted by the Lahore High Court in two petitions submitted separately in the recent past.

This has led to protests by people who own such cars and many of them have written letters to the CBR.

According to the Excise and Taxation Department, vehicles purchased 10 years ago or earlier were exempt from income tax till June 30, 2000. However, from July 1, 2000, the CBR made them taxable.

In the meantime, the tax was challenged in the Lahore High Court by two people. The court had admitted the petitions and the Excise Department provided the relief to the two petitioners.

However, the department was still collecting the tax because the CBR had not issued a direction to withdraw it and the relief was interpreted as having been granted to the two people in their individual capacity.

According to the department, the tax on old vehicles is slashed by 25 per cent every year. The rates vary from Rs500 to Rs1,000. The owners of these vehicles are also charged professional tax at a flat rate of Rs200.