LAHORE – The Punjab government has implemented a significant change to its vehicle token tax system, effective July 1st. The new policy bases the annual tax on a vehicle’s invoice value rather than engine capacity, marking a substantial shift in how automobiles are taxed in the province.
Under the revised structure, vehicles with engine capacities between 1,000 and 2,000 cc will be taxed at 0.2% of their invoice value. For vehicles exceeding 2,000 cc, the rate increases to 0.3%.
The reform also affects the lifetime token tax for smaller vehicles. Cars under 1,000 cc now face a one-time tax of Rs. 20,000, up from the previous Rs. 15,000. However, subsequent owners within a 10-year period will benefit from a 10% annual discount. After this period, the standard yearly tax will apply.
This policy change is expected to have far-reaching implications for car owners, particularly in the used vehicle market. Newer and more expensive vehicles are likely to incur higher taxes under this system.
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The Punjab government cites two primary objectives for this reform: increasing tax revenue and enhancing transparency in vehicle transactions. However, the new system may present challenges, including a potentially increased financial burden on owners of high-value cars and a possible shift in consumer behavior towards less expensive vehicles to minimize tax liability.
As this significant change takes effect, Punjab’s car owners will need to adapt to the new taxation landscape, which brings both advantages and potential drawbacks.
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