Punjab Updates Vehicle Token Tax: Invoice Value Now Dictates Rates

The Punjab government in Pakistan has implemented a significant change to its vehicle token tax system, effective July 1, 2024. This article explores the key details and potential impact of this policy update.

Goodbye Engine Capacity, Hello Invoice Value:

Previously, token tax was based on a vehicle's engine capacity (cubic centimeters or cc). The new system bases the tax on the vehicle's invoice value, potentially leading to higher taxes for newer, more expensive vehicles.

New Tax Rates:

• Vehicles with an invoice value between PKR 1,000,000 and PKR 2,000,000: 0.2% of invoice value
• Vehicles with an invoice value exceeding PKR 2,000,000: 0.3% of invoice value

Lifetime Token Tax Changes:

• Up to 1,000 cc: Increased from PKR 15,000 to PKR 20,000. Ownership transfer now requires full tax payment from the new owner.
• Ownership transfer within 10 years of purchase: 10% annual discount on lifetime tax applies.
• After 10 years: Lifetime tax no longer applies.

Expected Impact:

• Financial Burden: This change could significantly impact car owners, especially those purchasing high-value vehicles.
• Used Car Market: The policy may affect the used car market, with buyers possibly opting for less expensive vehicles.
• Tax Revenue: The government aims to increase tax revenue and promote transparency in vehicle transactions.

Overall, this policy shift introduces a new calculation method for vehicle token tax in Punjab. While aiming for increased revenue and transparency, it's important to consider the potential financial burden on car owners, particularly those in the used car market.

This article was published at New Token Tax Rates for Punjab Based on Vehicle Value