The Excise department in Punjab has reported a notable increase in vehicle registrations this year, surpassing 900,000 vehicles and motorcycles, including those in Lahore. This uptick has led to an additional Rs. 2 billion in motor tax collection compared to the previous year.
Recently, the Punjab government implemented revisions to its annual token tax policy for vehicles, effective from July 1st. Under the new policy, the tax calculation is now based on the vehicle’s invoice value rather than its engine capacity. Vehicles with engine capacities between 1,000 and 2,000 cc will incur a tax of 0.2% of the invoice value, while those above 2,000 cc will face a tax rate of 0.3%. Additionally, the lifetime token tax for vehicles up to 1,000 cc has been raised from Rs. 15,000 to Rs. 20,000.
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Importantly, when a vehicle ownership is transferred, the new owner must pay the full token tax again, with a 10% annual discount available if the transfer occurs within 10 years of purchase. However, after 10 years, the lifetime tax no longer applies.
These policy changes are expected to impact car owners significantly, particularly in the used car market where higher taxes on newer and more expensive vehicles could influence purchasing decisions. While the revisions aim to boost tax revenue and enhance transparency in vehicle transactions, they also place a financial burden on vehicle owners, potentially prompting a shift towards more affordable vehicle options to mitigate tax costs.
