Sindh govt losing millions for not implementing car registration policy

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The Sindh government is losing millions of rupee monthly as its excise department could not implement the new registration policy for motor vehicles announced in the finance bill 2015.

Meanwhile, the Sindh Excise Department did not issue any tender for issuance of new number plates of new registered cars for the last two years which is creating lot of problems for vehicle owners. In last two years, around 400,000 new and used cars have been registered with the excise department.

The federal government had announced a new schedule for the collection of withholding tax, but the excise department is still charging schedule tax announced by FBR for 2014-15. The FBR has increased rate of withholding tax on registration and transfer of up to five-year-old vehicles effective from July 1, 2014. “The decision of FBR to impose heavy taxes on registration and transfer of vehicles adversely affected the province’s revenue,” said H M Shahzad, chairman All Pakistan Motor Dealers Association (APMDA). “The customers of new and old cars are waiting for the implementation of new tax policy announced in the budget 2015-16,” he added.

“The Sindh government is losing around Rs 200 million per month in the head of motor registration tax,” he claimed. “The excise department is also not issuing new number plates of the registered vehicles for the last two years despite the fact that full payment had already been deposited, which is around Rs 400 million.”

The chairman said: “The owners of cars were not ready to transfer their vehicles on their name because of the higher registration taxes in the year 2014-15, which was around Rs 10,000 to Rs 250,000 depending on the power (CCs) of the vehicle while the non-filers was to pay up to Rs 450,000 on registration.

For this year, the FBR has given new schedule for charging Rs 5,000 to Rs 63,000 for filers and Rs 5,000 to Rs 300,000 for non-filer, Mr Shahzad said.

According to the analysts, the car sales have slightly declined in last few months owing to the new registration policy of the government. The Sindh government had also raised objection against the FBR move to discriminate among the filers and non-filers of income tax among the motor vehicle owners at the time of paying registration and road tax, said an official of excise department. He said most of the vehicles owners were not tax payers and ratio of the unregistered vehicles on road had been increased in last one year which was also dangerous for law and order.

The amazing measure of the FBR was that the withholding tax was being charged on each transfer of a new and used vehicle up to five years. The official said that no buyer of a second-hand vehicle would like to pay Rs 200,000 to Rs 300,000 on transfer and would prefer using vehicle on open letter.

This would not only heavily cut the government revenue but would also create law and order problem as it would be difficult for the law enforcement agencies to trace the actual owner of a suspected vehicle being used on open letter. He said registering old vehicles on the basis of CNIC was not possible because its existing database was not designed on CNIC basis, the official said. He said owners of new cars preferred registering their vehicles in other provinces where computerized system was not effective to avoid heavy taxes.

He further said that for implementing the FBR new tax scheme, major software changes had to be incorporated by the department in its present system which may require at least 30 days and that too will depend on uninterrupted internet services between the two departments.

According to sources in excise department, very few owners of the new cars registered their vehicles with the excise department in last few months. The car owners disagreed with the government new policy from July 2014.

The sources said the minister and the secretary were fighting for the number plates tenders in the excise department and the Rangers had already arrested excise secretary, Badar Jameel Mandro, few weeks back, but he was restored on his position before Eid.