ISLAMABAD: The Federal Board of Revenue (FBR) has said that a non-filer of income tax return is required to pay 4 percent advance tax on a lease of a motor vehicle either leased by Sharia compliant or conventional mode of financial institution.
The FBR explained the collection of tax on motor vehicle leased to non-filers through Sharia compliant mode under Section 231B of Income Tax Ordinance, 2001.
The FBR said that prior to Finance Act, 2017 every leasing company, scheduled bank, investment bank or development finance institution or modaraba was obliged to collect advance tax under Section 231B of the ordinance at the rate of 3 percent upon leasing or a motor vehicle to a non-filer.
Through the Finance Act, 2017 the ambit of collection of such tax has been extended in addition to above institutions, to a non-banking financial institution and both Sharia compliant or conventional mode, either through Ijara or otherwise have been included in its ambit.
Furthermore the rate of collection of advance tax under section 231B on lease of motor vehicle has been included from three percent to 4 percent of the value of the motor vehicle.
