The Federal Board of Revenue (FBR) has abolished the 18 percent sales tax on the auction of serviceable old and used vehicles if sales tax was already paid at the time of local purchase or import. This change means that auctioning these vehicles will no longer incur additional sales tax, reflecting the tax already settled during their acquisition.
However, the FBR will continue to impose an 18 percent sales tax on the auction of unserviceable or condemned old and used vehicles, regardless of prior tax payments at the time of their purchase or import. This rule ensures that such vehicles are taxed at the auction stage, irrespective of their tax history.
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The FBR provided this clarification in a report to the Federal Tax Ombudsman (FTO), explaining that previous exemptions applied only to vehicles auctioned by government departments or autonomous bodies where tax was paid at the purchase stage. The new policy specifies that while serviceable vehicles are exempt from additional sales tax, unserviceable vehicles remain taxable.
