New Token Tax Rates for Punjab Based on Vehicle Value

The Punjab government  has implemented a significant change to its vehicle taxation system, impacting annual token taxes for cars registered in the province. Here’s a breakdown of the key points:

Goodbye Engine Capacity, Hello Invoice Value:

Previously, token tax was determined by engine capacity. Now, it’s based on the vehicle’s invoice value (purchase price).

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 for Smaller Cars:

The lifetime token tax for vehicles under 1,000cc has increased from PKR 15,000 to PKR 20,000. However, ownership transfer within 10 years of purchase incurs a discount (10% per year).

Expected Impact:

  • This change is likely to affect used car markets significantly.
  • Newer, more expensive vehicles may face higher taxes.

Rationale Behind the Change:

  • The government aims to increase tax revenue and promote transparency in vehicle transactions.

Potential Concerns:

  • Increased financial burden on car owners, especially for high-value vehicles.
  • Shift in buying behavior towards less expensive options to save on taxes.

Overall, this new token tax system in Punjab introduces a value-based approach, potentially impacting car purchasing decisions and raising tax revenue. However, it also raises concerns about affordability for some car owners.

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