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Punjab Introduces New Token Tax Policy

Jawad  01 Jul 2024   326
Punjab Introduces New Token Tax Policy

Punjab Introduces New Token Tax Policy

In the latest finance bill for the upcoming financial year, the Punjab government has amended the Punjab Motor Vehicles Taxation Act, introducing a new token tax in the province. This new policy targets vehicle owners and mandates that the new owner of a vehicle with an engine capacity up to 1000cc must pay the full token tax again upon transferring ownership.

Annual Token Tax Changes
The new regulations shift the basis of the annual token tax from engine capacity (cc) to the invoice value of the vehicle. For vehicles with an engine capacity between 1000cc to 2000cc, an annual tax of 0.2% of the invoice value will be imposed. Vehicles exceeding 2000cc will be subject to an annual token tax of 0.3% of the invoice value. This change aims to create a more equitable taxation system based on the value of the vehicle rather than its engine size.

Lifetime Token Tax Adjustments
The lifetime token tax for vehicles up to 1000cc has been increased from Rs. 15,000 to Rs. 20,000. Additionally, when transferring ownership of a 1000cc vehicle, the new owner must pay the lifetime token tax with a 10% annual discount if the transfer occurs within 10 years. If the transfer takes place after 10 years, no lifetime token tax will be charged. These adjustments are expected to bring more revenue and streamline the tax process for vehicle transfers.

Financial Impact on Vehicle Owners
These changes are anticipated to have a financial impact on vehicle owners, particularly those dealing with used cars. The shift from an engine capacity-based tax to an invoice value-based tax could lead to higher taxes for newer, more expensive vehicles. While this move is likely intended to boost tax revenue and encourage transparency in vehicle transactions, it also places a heavier burden on owners of higher-valued cars. The long-term effects of this policy on the automotive market and tax compliance will need to be closely monitored.


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Ghulam Farooq

I own a Toyota Corolla xli 1900cc registered 2014 How much is the token tax annual which I have to pay for this year 2024-2025 as unable to know from rules which is based on car value

2024-07-01Reply