LAHORE – The Punjab government has introduced a significant change to its vehicle token tax system, effective July 1st. The new system calculates annual taxes based on a vehicle’s invoice value rather than engine capacity, marking a substantial shift in how vehicle owners will be taxed.
Under the new structure, vehicles with engine capacities between 1,000 to 2,000 cc will be taxed at 0.2% of their invoice value annually. For vehicles exceeding 2,000 cc, the rate increases to 0.3% of the invoice value.
The reform also affects the lifetime token tax for vehicles under 1,000 cc. This one-time tax has been raised from Rs. 15,000 to Rs. 20,000. However, subsequent owners within a 10-year period will benefit from a 10% annual discount. After this period, the standard yearly tax will apply.
This policy change is expected to have a considerable impact on car owners, particularly in the used car market. Newer and more expensive vehicles are likely to face higher tax burdens.
The Punjab government states that the objectives of this reform include increasing tax revenue and enhancing transparency in vehicle transactions. However, the new system may present challenges, such as an increased financial burden on owners of high-value cars and a potential shift in buying behavior towards less expensive vehicles to minimize tax liability.
Industry experts predict that this reform will have mixed implications for Punjab’s car owners and the automotive market as a whole. The full effects of this policy change remain to be seen as it is implemented across the province.
