Punjab Raises Token Tax for All Vehicles
The Punjab government has raised the annual token tax for vehicles starting July 1st as part of the new budget.
Under the new policy, the token tax will now be based on the vehicle’s invoice value rather than its engine capacity.
- For vehicles with engine capacities between 1,000 and 2,000 cc, the tax will be 2% of the invoice value.
- For vehicles with engine capacities 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 a vehicle up to 1,000 cc is sold, the new owner must pay the full token tax again.
If ownership is transferred within 10 years of buying the car, the new owner will get a 10% annual discount on the lifetime token tax. After 10 years, the lifetime token tax no longer applies.
These changes are expected to significantly impact car owners, especially in the used car market. Newer and more expensive vehicles may face higher taxes due to the switch from engine capacity-based to invoice value-based taxation.
The policy aims to increase tax revenue and make vehicle transactions more transparent. However, it adds an extra financial burden on vehicle owners, especially those buying high-value cars, and may lead buyers to choose less expensive vehicles to save on taxes.
