LAHORE: The Punjab government has raised the annual token tax for vehicles, starting from July 1st, as part of the new budget.
The updated policy states that the annual token tax will now be determined by the invoice value of the vehicle instead of its engine capacity.
For vehicles with an engine capacity between 1,000 and 2,000 cc, the tax will be 2% of the invoice value.
For vehicles with an engine capacity above 2,000 cc, the tax will be 3% of the invoice value.
The lifetime token tax for vehicles up to 1,000 cc has increased from Rs. 15,000 to Rs. 20,000. When ownership of a vehicle up to 1,000 cc is transferred, the new owner must pay the full token tax again.
If the ownership transfer occurs within 10 years of buying a car, the new owner will pay the lifetime token tax with a 10% annual discount. After 10 years, the lifetime token tax does not apply.
It is projected that these modifications will have a major financial impact on car owners, particularly for the used car market. The transition from engine capacity-based taxation to an invoice value-based system may result in higher taxes for newer, more expensive vehicles.
This policy change aims to increase tax revenue and promote transparency in vehicle transactions. However, it places an extra financial burden on vehicle owners, particularly those who purchase high-value vehicles. Furthermore, this change may cause a shift in buying behaviors, with buyers opting for less expensive vehicles to save money on taxes.
