Course: Financial Institutions and Markets 1754

Instructor: Tehseen Valjee

Assignment No.1-
Mini Budget
“Non-filers will be allowed to buy small and mid-size cars up to 1300CC”

Complete by:

Raghad Amir 14464

Rehma Fatima Alvi 14506

Fatima Binte Noushad 14149

Tehreem Fatima Khan 14138

Azan Memon 14242

An important aspect of the mini budget is that, non-filers will be allowed to buy small and mid-size cars
of up to 1300CC. This is a salient feature of the mini budget because before now there was a ban on the
non-filers and their purchase of new small sized cars. Non-filers are those people who do not file their
tax returns with the Federal Board of Revenue by the required date and therefore, are subject to
interest, late fees and other penalties.

The reason the government has made this move is because there are a lot of potential buyers in this
industry and because it is looking to bring more people under the tax net in order to increase revenues
as Pakistan has massive tax evasion, as a result of which the government is unable to increase its
income. The country has the lowest tax-to-GDP ratios (12%) in the region and only 1.4 million people out
of 200 million file their income tax returns. So this move will encourage more people to become filers or
pay more tax. Hammad Azhar, Minister of State for Revenues said that when the non-filers are able to
buy plots for up to Rs5 million then they can also afford to pay the extra tax that comes with purchasing
new cars. People will be able to purchase everyday cars from Honda City to Swift and Wagon R.

However, many people were concerned as to how the government will differentiate between the filers
and non-filers if both are allowed to purchase new small sized cars. The answer is simple. The
government will place an additional tax on the non-filers. The tax amount goes up to 35,000 rupees and
will have to be paid by the non-filers if they wish to purchase any new car of up to 1300CC. So for
example, if a non-filer purchases a car of 1300CC they will have to pay 35,000 rupees extra over the
amount they were already paying under the old tax policy. So, paying a total of 60,000 rupees in taxes as
compared to the filers who will only be paying 25,000.

Engine Capacity Car League Tax on Filers (Rs.) Tax on Non-filers (Rs.) Difference
800CC Suzuki Mehran 7,500 15,000 7,500
Suzuki Wagon R
1000CC 15,000 37,500 22,500
Suzuki Cultus
Honda City
1300CC 25,000 60,000 35,000
Suzuki Swift

Only time will tell how successful this aspect of the mini budget is. It may get more people to become
filers or it may leave them satisfied with paying more tax. In either case it is a way for the government to
receive more revenue and improve the budget deficit it is facing. A deficit that is going a little over 2
trillion rupees per annum.

Bibliography
https://www.pakwheels.com/blog/additional-tax-non-filers-have-to-pay-to-purchase-a-car-up-to-
1300cc/

https://www.samaa.tv/news/2019/01/non-filers-will-have-to-pay-rs20000-more-for-a-honda-city/

https://www.google.com/amp/s/www.thenews.com.pk/amp/423143-govt-offers-non-filers-buying-
cars-but-jacks-up-registration-rates